I think Ronald Howard's turn as Holmes is underrated. Sure the episodes are rather light and full of humor, but you still believe that Howard is Holmes.
He was teasing Watson about the indignities performed on Watson's person. He described his pull on Watson's nose as the old saying "I pulled your leg," meaning he could fool Watson by the disguise Holmes was wearing. Holmes explained it in a teasing manner to soften Watson's anger at Holmes over the worst indignity.
