There are two kinds of egotists: Those who admit it, and the rest of us.

The joke hinges on a paradox: the speaker divides egotists into those who admit their egotism and “the rest of us,” implicitly including the speaker among the non-egotists—yet the very act of claiming to be in the virtuous group is itself egotistical. The line satirizes self-deception and the human tendency to recognize vanity in others more readily than in ourselves. It also pokes fun at moral categorizing: people often create neat typologies that conveniently place themselves on the favorable side. As with much of Peter’s humor, the point is less to condemn egotism than to expose how pervasive and slippery it is.