Stick is using a play on words of 'Dire'; deploying it in the D&D manner of which TylerShads describes (no doubt inspired by GoT), but also in its common usage of meaning terrible.
If someone is in Dire Straits, their situation is considered dreadful. Dire is traditionally used to indicate the relative lack of quality, promise or effort of something. To say Canada is 'Dire' is to say it is a terrible place.
Southpark is well aware of this dichotomy of language: a Dire Wolf could be represented as either a fearsome beast (terrible because it is so frightening, terrifying) or as a dog with no legs (a terrible, useless wolf).
Both would be terrible wolves, but with each definition of terrible informed by the context of its deployment.
This is the wordplay Southpark is trying to suggest/lampoon with such things as 'Dire Aids'.