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Being the mom of a 2-year-old, I am quite familiar with the Wiggles. I guess for a non-parent, it might be hard to get the joke here, but if you watch as many Wiggles DVDs as we do around our house, it seems to me it should be obvious. It's funny because these guys are as "white-bread" (no pun intended) as they come, and their act is wildly popular with the 2- to 5-year-old set. Believe it or not, Greg's departure is a pretty big deal. He sings most of the vocals and writes a lot of the songs. Even though people are saying the kids won't notice the change to the new guy, I suspect many of them will.
For what it's worth, I thought the Wiggles/hip-hop parody idea was hilarious. I don't see any racial slur implied here. Kaufman's a very talented writer -- I read all his stuff, even the sports pieces, and I don't give a rat's ass about sports.