It was punching down. Take this with a grain of salt because of who is saying it, but he has a point. In particular, making fun of someone for a medical condition, especially for a person who has a well known diagnosis, is dangerous territory if the person is the blunt of the joke as opposed to being in on it (like a comedy roast) and able to give constructive context. It doesn't help that Jada Pinkett Smith is generally unlikable, and definitely deserves the past jokes directed at her questionable marriage life choices (as Rock has done at the Academy Awards previously): that tends to give cover to those claiming she needs to lighten up and ignores all the other people that actually might be hurt hearing that joke.
I like Chris Rock, and I will still appreciate his humor after this just the same. He got carried away and made a joke he shouldn't have, and he didn't deserve to be physically attacked for it. I also think JPS has every right to be hurt by it, and that Will Smith deserves some empathy for having a momentary breakdown with catastrophic potential. It's depressing thinking about it.