A note from experience - if anyone ever tells you this and you are as funny as I am, do not worry for their mental well-being: they are just flirting.
Oh, it's not such a bad thing then - you shouldn't worry about your looks/appreance either : 't means they like you and find you cute/hot ! :-)
Is there any real difference between "śmieszny" and "zabawny?"
Also between "żart" and "dowcip?"
how deep in difference do you want to go?
I am sure there is a difference, but very small. I think dowcip is more spoken, and not like a prank or sarcasm (I'm kidding- żartuję)
joke and prank
why is really funny not accepted?
"Your jokes are very entertaining" was rejected.
"your jokes are very cheerful" - why it is wrong?
Mostly because cheerful sounds more like consoling to me, although this is just my perception of the word cheerful. I just wouldn't use it in such a context, it sounds misplaced.
"cheerful" is rather "radosny" than "zabawny".