It's a 1970s television staple: the scene at the end of an episode where somebody says something, and everybody laughs or deploys a cheesy grin. It just goes horribly wrong in this scene, where they're all chuckling about "pain wands."
This moment of sadistic weirdness comes from the end of an episode of the 1970s Logan's Run TV series. Our heroes have escaped from a group of lizard aliens, who were trying to dismantle their android friend Rem so that the aliens could repair their transmitter. But Logan and his friends destroy the aliens' gear and also lower the temperature so much, they go into a coma. As you can see in the clip above, the old guy who's been stuck there with the aliens says that he's going to lock them up while they're quiescent. But Logan suggests that now that the aliens can never repair their transmitter and leave the planet, they may want to live in peace.
And then the old guy says the thing about, "Especially now that I have their pain wands," and everybody starts chuckling at how funny that is. WTF Logan?