Like any episode of the original "Peaks" series, this one has its overly melodramatic moments that can sometimes be laughable (which is sometimes intentional, sometimes unintentional), but most of the laughs here are genuine. David Lynch himself guest stars as the near deaf Gordon Cole who is definitely one of the best and funniest characters from the show despite his limited amount of screen time in this season (luckily, he became a huge part of season 3). Lynch's performance is as hilarious and strange as one could ever wish for, and he's constantly shouting quotable lines while also moving the plot along.
Other moments delve into more horrific and mysterious territory, particularly the encounter with Philip Gerard who, when unable to use his medication, reveals that he is no more than a host to the spirit of Mike, who was previously seen in Agent Cooper's dream. The sequence is surreal and creepy, and Al Strobel's performance is as frightening and powerful as can be. His booming voice and starkly serious facial expressions add heavy layers to his enigmatic, spiritual, and eerie overall character. More surrealistic moments can be found in a disabled Leo's welcome home "party", mildly absurdist dialogue about musicals delivered hilariously by Jack Nance, etc. Much of the surrealism comes from slight details in behavior or setting that make the entirety of some sequences feel gloriously "off", adding on to the show's knack for comical absurdity and mysterious horror.