Panel 1: As John works on his model railroad, Liz hands him her homework assignment and asks him to tell her if she got it right.
Panel 2: Said assignment goes as follows: The Copulation of Canada: Canada is a big country with not much copulation. the copulation is mostly in the south because of the climat being more warm and also because of the St Lawrence River and the United States. Elizabeth
This, of course, is another means by which Mrs Wellsley can be called a fink who hates children: Elizabeth does not know how to express herself in print without making barbarous errors in spelling, usage, vocabulary, capitalization, syntax and punctuation but is quite unwilling to admit that she's barely literate. What we are about to see is why this persists as long as it does.
Panel 3: Said thing is John laughing at the bafflingly consistent substitution of the word "copulation" for the correct word "population." Since Liz is a naive waif for the purposes of today's joke, she assumes that he's laughing because she misspelled "climate."
Summary: What has always baffled me is how does her not being able to see properly make her mishear the word? Her ears aren't myopic, for Christ's sake! Also, a fuzzy looking "p" looks more like an "o" than a "c" anyway so if she copied it wrong, we'd get something like "The Oopulation of Canada."