I don't get Japanese jokes and sence of humor.

Example: A friend said: " I'm sorry for the strange question but what do you think of my face?"
I said: "what?"
And he repeated his question...then he added " Do you think I don't look clever?"
then i started talking nonsense explaining that he looks nice and that the appearance isn't the most improtant thing and so on.
He just said"I was joking"
And i was so ashamed. "Ah is that so" - was my silly reply