Johnny's parents want to have sex, but don't want Johnny to be around or know about it. The implication is that Johnny is too young to know about sex. So they tell him to go eat an ice cream outside and give him a task to distract him, while they are having sex inside.

The joke is that despite the parents attempts at being stealthy, Johnny knows what sex is, and knows that him being outside and eating ice cream means his parents are having sex. But he still plays along with his parents' efforts for misdirection, and doesn't say it outright. Instead he tells them the neighbours are having sex, because their kid is doing exactly what he's doing.

The kid is eating ice cream on the porch while the parents are screwing, and the kid figured out their trick. They're just yelling to each other because there's a window open or something.