It's an indication of how much Ernie is loved. Recently, this urban legend has been sprouting variations as to the manner of impending death or the muppet involved. He eventually meets the old lady, who makes him take care of her children. He then interviews Humpty Dumpty, who's safely on top of his wall. Eventually, Kermit gives him a hearty congratulatory slap on the back,and, of course, he falls off.
Sirens go off, horses and men show up, and there's a lot of talking and confusion.
Peter Piper Kermit goes to Piper's pickle patch and meets Papa Piper, Piper Piper, all sorts of Pipers except Peter. Eventually Kermit is covered with peppers. From the Planet Koozbane There's also one from the Muppet Show where he broadcasts from the planet Koozbane, with the Koozbanian Foob, the most sought after food on the planet. Kermit's asking him how they survive. No, I suppose not.