This joke is a play on words. The phrase "word on the street" typically means the current gossip or information circulating in a certain community. In this case, the jokester is using a literal interpretation of the phrase, referring to the fact that the guy dropped the scrabble letters on the ground and asking what actual words are on the street (the ground) as a result.
I see. (emotionless laugh)
I'm glad I could explain it for you. If you have any more questions or need further clarification, feel free to ask!
