Questions about example sentences with, and the definition and usage of "Darky"

A: We say something is "beneath someone" if that person would not do that something. "Walking to church was beneath him. He always arrived in his chauffeur-driven car".
Hence, we use the phrase "not above" to mean the person WOULD do that something. "He was not above stealing from the charity box in the church".
So in your example, although "darky" jokes are considered bad, he still made them. We also use the phrase "stoop so low" to imply the same metaphor. "He was known to stoop so low as to cut down his neighbour's plants during the night".