Considering the mermaids's state of undress in the opening, this short clearly predates the Hays Code.
The lobster in the piano scene is meant to resemble Harpo Marx.
Hollywood had fallen in love with all things Polynesian a few years before, so it was a popular theme for films of all types.
The court jester gives the closing line, That's All, Folks!
Although the octopus shown here is portrayed as a villain, in reality, the creatures are quite shy (yet inquisitive), and very intelligent.