This joke plays on the ambiguity of the phrase "10 types of people" by using a binary number representation. In the binary number system, which is base-2, the number "10" represents the decimal number "2". So, when the joke says "There are 10 types of people," it could be interpreted as "There are two types of people."

The punchline then cleverly plays with this interpretation. It divides people into two groups: those who understand binary (and thus get the joke) and those who don't (who might interpret "10" in its decimal sense and not get the joke). 

In essence, it's a play on words that combines a binary joke with a bit of irony, highlighting the difference in understanding between those who are familiar with binary notation and those who are not.