To be the "butt of a joke," is to be the object of much derision. For instance, in The States, New Jersey is the butt of many a joke, being called, among other things, "The Armpit of the United States." West Virginia is the butt of many jokes for different reasons.
In this instance, I would take "butt" to be a striking point. "Butt" also refers to a human's hind-parts.