This isn't the One Piece you need to understand the plot. It's the one where Jango's panic spirals into island-wide hypnotic dancing, and the Straw Hats just roll with the chaos. Pure early-2000s energy: cheap, loose, unhinged in the best way. The joke is that nobody involved cares about stopping him, they just want to see what happens next. It's a special built on the assumption that sometimes the funniest thing is letting a minor villain's desperation become everyone's problem.
The Straw Hat crew is on Mirror Ball Island while the East Blue's biggest dance festival is in full swing. Their timing couldn't be worse. Jango, an outlaw hypnotist, is enjoying the party when a Marine captain finds him and corners him. To get away, he hypnotizes the whole island into dancing to the point of collapse. Luffy and his friends are swept up in the chaos and end up forced to keep dancing all night along with everyone else. The special plays the situation for comedy with a fantasy twist.