Q: What kind of tree fits in your hand?
A: A palm tree!

Explanation: The palm of your hand is the part that faces things you grab.  It is easier to see in the picture.  The palm of your hand is rather small and, ordinarily, would not hold a tree.

A palm tree is a tree that is found in tropical climates like the one in the picture.

This joke is funny because it plays with the two meanings of the word palm: part of your hand and a type of tree.

Speaking of palms, do you know how to do any magic tricks with your palm?