Part of the function of humour is to subvert the accepted order of things. Whenever an individual or a group take themselves too seriously, humour — especially satire — cut them down to size. For example, humour was really important for subverting the Puritan hegemony in 17th century England.
In ancient paganism, there were feasts and processions which inverted the accepted order. Men wore large fish-shaped penises in one ancient Greek procession. The Roman festival of Saturnalia had an element of misrule, and masters were expected to serve their slaves for one day. This was a sort of safety-valve to let off steam and prevent revolution.
In the Middle Ages, the whole 12 days of Christmas were given over to feasting and merriment, and a Lord of Misrule was chosen at random. In Northern France, there was a church service at Christmas dedicated to the donkey that carried Mary to Bethlehem, and everyone brayed like donkeys as part of the liturgy. Churches elected boy bishops to perform a similar function to the Lord of Misrule. As with the ancient custom of Saturnalia, this temporary inversion acted to relieve societal tensions.
Kings kept a fool because they needed one person who would tell them what they actually thought, instead of sucking up to them and telling them what they thought they wanted to hear.
I would not join any religion that couldn’t laugh at itself. In the Wiccan text The Charge of the Goddess, written by Doreen Valiente, it says, “Therefore let there be beauty and strength, power and compassion, honour and humility, mirth and reverence within you”. I think the inclusion of mirth in this list of virtues is really important.
Pagan mythologies were probably intended to include humour. One use of humour that springs to mind is the story of Baubo, who found Demeter weeping and wailing for her lost daughter Persephone, and by dancing lewdly and making fun, got Demeter out of her depression and got her to do something.
The novelist Tom Holt has suggested that what Prometheus stole from the gods was not fire, but humour. In his novel Ye Gods, there are many parallel worlds, some where humour has been discovered, and some where it hasn’t. In the worlds where there is no humour, the people are oppressed and miserable.
I actually think that religions that are sex-positive, inclusive, don’t take texts literally, and can laugh at themselves, are a different kind of thing than the religions that don’t. This is especially true of Paganism with its esoteric components of initiation and magic, and its celebration of the body and the erotic. But the main point here is that you cannot be completely oppressed if you have the weapon of satire at your disposal.
The belly-laugh and the orgasm both involve loss of control, release into Dionysiac pleasure and union with the Divine – something that the more legalistic religions actually seek to prevent. That is perhaps why Baubo is both sexual and funny, because she represents the Dionysiac side of life.