The over-the-top absurdism of Dr. Spaceman helps set up the more subtle humor of other parts of the show. Besides, Parnell's wonderfully deadpan way of playing those insane lines balanced things out.
That's spot on. One premise of the show is you have a relatively "normal" person (but with her own idiosyncrasies) trying to deal with employees who are all dysfunctional on some level. Tracy is one of the most dysfunctional because he is crazy. Presumably, to stay alive, he'd need a doctor who is also "normal" to stay alive, but in this case his doctor is even crazier than Tracy. That's the joke, but it also adds surreal humor to the mix on the show, which makes it funnier overall.
And the actor was particularly good in the first live episode.
IIRC, he was known for having the record for not breaking character on SNL.
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