What's orange and sounds like a parrot?

What's orange and sounds like a parrot?
A carrot.

This joke is a pun. The humor lies in the dual definition of the words "sounds like". They can mean "makes the same noise as" and also "sounds similar to". The listener, then has to change their manner of thinking in order to understand the answer.

If the joke were reversed: "What is red and sounds like a carrot?", the listener would be far more likely to try to come up with a word that rhymes with carrot than the way that it is now.