I've mentioned before that those with chronic illness have some of the best senses of humor I've seen. We more or less have to. The option is often laugh at oneself or one's situation, or cry, and laughing often makes getting through it a lot easier. (I am a full proponent of a good cry, but that's another post entirely).
Why do we deflect through humor? It's simple. In addition to the above option of laughing instead of crying, it's often self preservation. If I make fun of myself first, joke about myself and my condition, it takes the power from others who were going to do so maliciously. I once had a friend tell me, "everyone used to call me a jerk (I changed the word here)," and I'd reply, "yep, you're right." And the name-caller didn't know what to say because their insult now held no weight. People say things because they expect it to hurt you. They want you to react, because that gives them the "power." They think if they make you feel bad, that you'll change, or that they'll feel superior and you'll view them as such. But if I start making fun of myself, this no longer works. It's no fun, nor is it effective, to tell someone something they already know, something they admit themselves - especially something they admit in a humorous manner. Picture it this way: you're at a holiday party, and you have nothing nice to wear that's clean, so instead you purposely wear the ugliest, most god-awful sweater you can find. Someone comes up to you at the party and says, "wow, that outfit is atrocious!" Is it going to actually make you feel bad? No, because you owned up to the fact that you weren't going to look your best in at this particular party hours (or longer) ago.
Humor helps keep conversations light. My conversational moods range drastically from super excited (and loud and energetic) to my resembling eeyore, and I realize that most people would prefer to be somewhere in between. So, when people ask how I'm doing, if I'm able to use a bit of humor in my honesty, it tempers the mood - one way or the other - while still not putting on a facade, which anyone who knows me knows I abhor. It also serves to let my friends and family know that, while I'm very serious about my condition and it's NOT something to criticize of or stigmatize, I can have a sense of humor about it when appropriate, especially when I am joking about myself. It lets them know that my condition isn't a taboo topic to tiptoe around, and that I'm well aware of how it can affect not myself, but those around me, but it does so in a more relaxed manner.
More than anything, though, humor can help us from taking ourselves, and life in general, too seriously. With all the negativity in the world, and in the news, and in our own brains, especially for those of us with mental health conditions, this can be easy to do. But when you add in humor (where appropriate, I can't say that enough), it helps you to remember that smiles and laughs can still be present, and these tiny moments of peace can help to break that negativity up, give us a breather, let us feel some peace, if even for a moment. And that, to me, I think is the most valuable use of humor, not just for those of us with mental health conditions, but for humans in general.