"Sing a song of six pence
A pocket full of rye"...
Six pence was the usual amount of payment for those pirates who were paid but few pirate masters paid their crew in actual money. Blackbeard was an exception. He also provided his crew with a canteen of rye whiskey per day.
"Four and twenty blackbirds baked in a pie"...
It was a 16th and 17th-Century custom or trick to hide trinkets or little gifts in a pie. This referred to Blackbeard's crew hiding prior to an attack. Their ship looked to be a ghost ship. The blackbirds, of course, referred to Blackbeard's men and their numbers.
"When the pie was opened, the birds began to sing"...
The pirates came out of hiding, showed themselves and began their attack.
"Wasn't that a tasty dish to set before the king"...
This does not refer to a real king, but rather to Blackbeard, himself. The tasty dish was the plundered ship.
"The king was in his country house counting out his money"...
Again refers to the fact the Blackbeard was willing and able to pay his crew in money.
"The queen was in the parlor eating bread and honey"...
A reference to his ship, the Queen Anne's Revenge and what a splendid ship on which to serve.
"The maid was in the garden hanging out the clothes"...
The maid was the ship in position to attack. She knew where the prize was. The garden referred to the waters around the Carolinas and the Caribbean where the Queen Anne's Revenge haunted. Hanging out the clothes signaled that the targeted ship was at sea or ready to leave port. Its sails were already hung in the breeze.
"When down came a blackbird and nipped off her nose"...
This is Blackbeard bragging over his prize, his spoils of encounter.
