What purpose does Lancelot serve in the play at this point?

The old proverb is very well parted between my master Shylock and you, sir—you have “the grace of God,” sir, and he hath “enough.”

Launcelot provides much needed comedic relief here, although in reality his father appears at the very moment he's struggling with his conscience (a very funny dialog with himself) about whether or not to run away. In the context of "everything happens for a reason," his meeting with his dad proves very fruitful, his need to run away is solved, and he is able to walk away from Shylock with a clear conscience.

Launcelot is a funny, witty character........... his appearances are meant for smiles.