Who would've thought that something so seemingly innocuous as a bunch of people laughing without smiling could be so horrible. But it is. It's like some sinister horror show.
It must have something to do with puppets (it's ALWAYS puppets) and their weird uncanniness when they talk or laugh through frozen lips, which this is reminiscent of. But because these are actual real humans and not puppets, it's extra freaky.
And if you're watching it and thinking "This isn't so bad" just wait until the end. Pure and utter nightmare fuel plain and simple.