A parody is an imitation of a serious work that attempts to mock or ridicule it by use of extreme exaggeration, humor, etc.   A great example of parody is evident in Mel Brook’s Young Frankenstein, which imitates the original Frankenstein novel by Mary Shelly.  So many aspects about the genre and culture of the original work and movie are parodied by Young Frankenstein, including the setting, characters, plot, etc.  Here is a brief explanation on how the gothic/horror genre, the original movie and book, and the developing pop culture around the Frankenstein were parodied in Young Frankenstein.
The gothic and horror genre relies heavily on the use of strong emotions.  The gothic era specifically, which proceeded the romantic era, was all about how the dark side of the world could affect your emotions.  As well as the emotional aspects, the gothic era also encompassed a new level of supernatural, metonymy, and extremity awareness.  Of course, Young Frankenstein was able to parody the gothic genre.  Although the emotional aspects were a bit harder to parody and the differences were a lot harder to point out, strong attention was paid attention to the extreme and supernatural aspects of the gothic era.  For example, the paranormal was mocked when we were to believe the castle was haunted by a violin playing entity.  The castle in and of itself is part of the parody, as there is nothing even remotely close to a structure of that size and magnitude in any of the original works.  Castles are a huge part of gothic imagery and the gothic era, and its existence in Young Frankenstein was to exaggerate the setting where the events took place.
The original Frankenstein book was more or less a series of letters and a flashback or recall about a man’s life and his creation.  In short, a man, lost in the world, creates a monster, which begins life for all the right reasons to help others around him, but in the end becomes the epitome of evil.  The man then recounts his life trying to end the life of his creation.  In Young Frankenstein, we are presented with a whole different situation where the grandchild of Frankenstein discovered his grandfathers “hidden library” and follows in his footsteps reanimating dead tissue.  The main parody elements here is that Victor had a grandchild in the first place, who then continued on his work.  The movie broadens our understanding of what happened the first time, specifically in the creation and early life of the creature, which are left out in the original book.  Although it does not necessarily mock the original, it does imitate and expand upon it with greater depth.
The original Frankenstein Movie is also parodied in Young Frankenstein, mainly in the same way as the book.  The original movie seems to provide a framework for Young Frankenstein to be built upon; the primary elements that are parodied are there to help broaden our understanding of the preceding work.   There are, however, a few parodied elements that were added to mock the previous work, such as the creature fear of fire.  Young Frankenstein took advantage of this and incorporated it into the plot, and used it to create a comic effect.  This is only one of many examples, however, of the use of Parody imitating the original movie.
The pop culture that has arisen from Frankenstein, particularly the original movie, has been parodied as well.  (As well as influenced further by these parodies.)  In the original movie, we are introduced to the angry mob, the evil castle, the abnormal brain, etc. etc.  So many aspects of Frankenstein that were never part of the original book were added, completely changing the story.  Young Frankenstein took these changes and parodied, or developed them even further.  Young Frankenstein parodies the angry mob by the introduction of the policeman.  It parodies the monster’s evil by making the monster somewhat humanly understanding.  It also parodies Victor (or his grandchild)’s relationship with Caroline by adding in a new character (whom he has an affair with in the later movie).  
The parodies of each subsequent work are dynamically changing the culture society has placed around Frankenstein.  Each new work expands the last in a new direction, off on a different tangent.  By imitating and mocking a previous work, but by trying to broaden and expand it, the result is a much different product from the original.  Just one example of how Parody works.