It's wrong to assume words don't hurt others.
Billy and his friends have a playful relationship, and talk some trash on each other some time, Josh and Billy in particular.
Billy wants to entertain his friends.
Billy pokes a little fun at himself, mostly all at his expense.
Billy makes a few jokes at Josh's expense, making fun of his sickly aunt.
Billy's friends laugh, especially Josh cracks up a lot.
Josh takes a lot of offense to it, thinking Billy went far too far.