Okay, fine, I'll be the first to admit that the second I laid eyes on the overblown, cockeyed image of Knuckles, I laughed first and asked questions later.
Huge mistake on my end, and I have the incredible photographer, AshB, to thank for initially opening my eyes as to why this meme is no longer a laughing matter.
Let's talk about the origins of this absurd meme before we get into what makes it racist (hint: it's thanks to certain members of the gaming community (which hasn't exactly gone out of it's way to prove it's not above racism, sexual assault threats and harassment, etc, etc...)
The original image of Knuckles that has become widely associated with the Ugandan Knuckles meme comes from YouTuber, Gregzilla, who did an admittedly funny review on the joke of a Sonic game that is Sonic Lost World.
From there, that image became synonymous with memes and songs that were funny until they weren't.
One such meme is the one-liner from the Ugandan action/comedy movie, Who Killed Captain Alex: "He knows the way of using a gun!".
It didn't take long before gamers took to using that quote in a popular multiplayer shooter called Player Unknown's Battlegrounds, and because this is the internet, the original movie quote devolved into what it is now: "Do you know the way", which is punctuated by a heavy, Ugandan accent.
As quoted by AshB, regarding why this is unacceptable (particularly pertaining to Black people who mock African accents in harmful ways):
"When I think more about people putting on accents mimicking people from countries foreign to them for comedy, it becomes uncomfortable. Then add in the extra layer of discrimination that those people who actually possess those accents experience at the hands of those mimicking them and it becomes downright gross."
Now Ugandan Knukcles being used in horrifically racist ways that have shit-all to do with the movie itself: Most popularly, the imitation of the unique verbal sounds of the Bantu and Khoisan languages, and jokes at the expense of the Ebola outbreak in West Africa.
"Ugandan Knuckles" has since gone on to find inexplicable success in the VR Chat community, and continues to rapidly spread across various gaming channels and communities, such as Overwatch (where players and viewers continue to share their confusion, upset, and are forced to explain why this meme is blatantly racist).
Major mainstream gaming and nerd outlets such as Gizmodo, Polygon, and Kotaku have already taken the emotional labor to explain why Ugandan Knuckles is the latest case of rampant racism in the gaming community, and have shared the same view in hoping that should this meme happen to show up on some idiot's sign at an Esports event (or any event), it will be rightfully confiscated.
Y'know. Kinda like how the alt-right meme Pepe The Frog made it's way to such an event and was promptly and properly dealt with.
And coming right off of the racist remarks of that Cheeto-dust covered bigot sitting in the oval office, it's no surprise this meme became as popular as it did.