I don't get why people are laughing at this scene. Could you explain it a little bit?

Rebecca

People laugh here because people think Phoebe is being a little slow and senseless 'cause she thinks Monica believes that Phoebe is Supergirl. Of course, Monica and the audience both know that it's Phoebe in a costume and not the real Supergirl, so when Phoebe points it out, people think she's not thinking clearly, so they laugh at that.