Maybe people missed the "parody of hacky comedians" aspect with Rob Schneider and Adam Sandler onstage.
The sketch was meant to lampoon the dozens of pastel-blazer-clad hacks who began lurking around comedy clubs in the wake of Seinfeld's success. Seinfeld also used the phrase as a self-referential bit on his sitcom, like when his character purposefully tanked his set with jokes like "What's the deal with cancer?" The problem was that the parody worked too well -- we all crossed it up in our minds, and now only remember Seinfeld as the kind of hack he mocked. He is his own worst enemy. We assume he cries himself to sleep about that every night on his giant bed made out of exotic cars and unicorn feathers.