It's fun = It's enjoyable/ We enjoy it Strictly speaking, 'fun' is a noun ( as in 'We had fun'), but informally it's OK to use it in this way as if it were an adjective. It's funny = 1. It's comical/ It makes us laugh 2. It's strange Although these two words are obviously connected, the meanings are clearly different. Native speakers never confuse them.

Adding on to Su.Ki's answer: "The Cat in the Hat" is a famous book by Dr. Seuss written to help young children learn to read. It contains the rhyme: "I know it is wet and the sun is not sunny, But we can have lots of good fun that is funny." Young English-speaking children can understand the play on words here. It mean "We can enjoy doing silly things that make us laugh." We could say "It's fun to see the monkeys in the zoo, because the funny things they do make us laugh." "Funny" is an adjective for something that makes us laugh: a funny joke, a funny comedian, a funny clown. "Fun" is a noun for something that people like to do: it's fun to play golf, it's fun to splash in the water at the beach, it's fun to go camping. ("Funny" can also mean something that seems wrong. "Hmmm... this milk tastes a little funny to me, I think it's going sour. I'd better not drink any more.")