I believe this was a book of collected stories focusing on a planet that developed its society based on a stranded circus troupe. I vaguely remember that there were wizards (stage magicians using trickery), acrobats, showgirls, and clowns, at the least, as kind of guilds in the society. The particular story that I recall had two clowns meeting for battle, and it turns out to be all about puns with the other looking physically shaken by a blow with each pun uttered.
Unfortunately, the details have largely escaped me other than that one involved a clown saying that his uncle had fallen into a bad vat of dye, but came out alright because "only the good dye stunned" (I have a vague idea that this pun was either what took the other fellow out, or that it was a particularly weak pun that preceded his defeat). If I recall correctly, it was very much a "young gunslinger takes on the veteran" feel, and I think the veteran clown won. My vague memories is that the narrative involved someone from off-world interacting with the people on the planet, providing an excuse for everything to be explained to the reader.
I read this somewhere in the early 1990s in a hardback book from the local library (the book is probably long gone given how much wear they tended to incur) and I think the cover showed a poster of a circus clown with a lizard crawling out of the clown's eye.