It's upsetting for the Joker that Batman pretends to be a monster but still shows he is a square-jawed hero under the mask. It's basically saying that your exterior appearance has no bearing on who you are. The Joker thinks because he looks like a monster, he has to be one. Batman says, nope. It's also a reference to the cover of the trade, showing the Joker's own ugly, bloody jaw.
There's really a lot of substance in just those three simple words. It's not just a screw-you to the Joker himself, but his fandom too - in keeping with the Perspective Flip of the comic, showing Batman to be the one tormenting Joker rather than the other way around, a succinct but powerful take on Bane's "You think darkness is your ally" type of speech. He's saying, quite simply, that for all his pretensions of being a free-thinking revolutionary anarchist, at the end of the day the Joker is just another petty, sadistic bully trying to rule Gotham by fear. But that position has been filled.
