Okay, I trust that you've read it and will know what I'm talking about without my having to go into too much detail.
First of all, the humor of the book was mostly lost on the first graders. The prime audience were the second and thirds, though the thirds were fooled by the first page into thinking it was a too easy word book for little kids and thought it would be boring. When I asked the first graders what 'despondent' meant, looking at the bird for clues, many of them thought it meant wet due to the rain cloud above the bird. The 2's and 3's got it right away. They all understood that scarlet was a shade of red. Everyone laughed at the word 'haberdashery' and one girl asked me if it was a real word or just made up. They all thought the baby who owns the haberdashery was funny, too. I had more than one class point out how silly it was that the baby was so big in the picture and could talk. I then pointed out to them that the goat was driving the convertible, which they seemed to accept pretty readily. They all understood that a mezzo-soprano was a singer, the older kids knew that she was specifically an opera singer. Many of them, at the end, asked why the bird was still despondent, to which I replied "That's what kind of day she's having."
After reading the story to a class today, one student had misplaced her shelf marker and was starting to get a little upset about it. When she finally found it she told me about how she was starting to get a little upset about misplacing her shelf marker. I asked her if it made her feel despondent and she smiled and said "Yes!"