The beginning of the Jack and Jill nursery rhyme goes "Jack and Jill went up the hill to fetch a pail of water". The word pale is a homophone of pail. "Pale in comparison" is phrase that means something is not as good compared with something else. The joke is saying other nursery rhymes "pale in comparison" to the Jack and Jill one, but use "pail" in place of "pale" to reference the pail in the Jack and Jill nursery rhyme. The joke is centered on the word pail, its homophone pale, and its use in "pale in comparison".
Jack and Jill is the best nursery rhyme as others pail in comparison .