Heathcliff is laughing at some Sloth-like abomination who doesn't understand what humor is, so he laughs too, because a kitty is doing it.

I think this is the comic where Heathcliff is revealed to be horribly fucking evil. He's laughing at the guards, probably because he plans to let the "lion" free. He's laughing at the "lion" because, well, just look at the fucking thing. It looks like a bear with a 70's haircut, but somewhere along the path to drawing this terrible vision, Peter Gallagher was visited by an Alien race who looked at the drawing and went "Oh no, you're doing it wrong." Gallagher shot them with his pistol and did some acid, at which point he decided that lions sit like house cats, have bodies that can float through the bars of a cage, and that said fucking cage would have a fucking sign that just fucking said "LION" in block fucking letters at the top. It couldn't be worse if Heathcliff were dangling a small child before the "lion's" jaws, which may have been the action leading to the guffawing. Perhaps it was a baby named Ruth, and the "lion" just kept going "BABY...RUTH! BABYRUTH! BABY RUTH!" over and over again until blood fell from the sky and the heavens were torn asunder. Or maybe Heathcliff is just a fucking murderer.

GUFFAW!