Complex sentence: Much of the humor that surrounds the character of Arnold comes from his human-like abilities and lifestyle, and the fact that everyone in Hooterville (except Oliver) treats him as fellow human and can understand him when he speaks with pig grunts.
Split into simpler sentences: Much of the humor that surrounds the character of Arnold comes from his human-like abilities and lifestyle. All of the local humans (except Oliver) treat him as fellow human, and they can understand him when he speaks with pig grunts.