I do remember there were episodes where Milhouse was a child actor "superhero" in a show.
As for the joke, maybe the guy in the middle is one of the writers, which would be why they all crowd around him.
Looks like he's tinkering with some kind of device (or sci fi replica). Maybe it's even real in this episode, but that might be a stretch (even though it could be a joke if delivered in a certain way).