My understanding of this line is as follows: Romeo of course is speaking to himself as he is hiding from his friend, Mercutio and Benvolio as they are leaving the Capulets' masked Ball where Romeo...
mercutio is teasing Romeo of his crush on Rosaline in the scene before, however, Romeo has now seen and fallen in love with Juliet and basically says that Mercutio teases him about nothing- he teases...
'Jests' from the play Romeo & Juliet means "makes jokes" and is used in the quote, 'He jests at scars that never felt a wound.' What is meant here is that, Mercutio is laughing/sneering at...