Like other Monster Foods, it restores Hunger, but damages Health and Sanity. However, neither Webber nor Wilba will suffer the Health and Sanity penalty when eating it.
While the Monster Lasagna damages health when eaten it still restores a big chunk of durability for both the Eye Mask and the Shield of Terror.
It is best to avoid this Crock Pot Recipe, as it restores less Hunger than most of what would be used as ingredients, and causes a bad chunk of Health and Sanity loss. Although cooked Monster Meats on their own would cause a lot less Health loss, eating two would cause the same Sanity loss as Monster Lasagna.
For Wilba, Monster Lasagna counts as one Monster Food towards her Werewilba transformation.
Trivia
Woodie's quote may be a reference to the comic Garfield, which revolves around a cat that loves lasagna.
During the Pig Fiesta event in the Hamlet DLC, Monster Lasagna takes on a more festive appearance.