To dance is to move in a pattern and not towards anything in particular. This is to make yourself the destination, and to enjoy never quite arriving. Dancing always requires 2 objects, but the more, the merrier. Everything dances differently, so the player is encouraged to do it with different things.
Join with 2 or more of the same thing, then stop moving and press a button to stop moving to dance. When dancing, you and all the other objects will then begin to move about each other in their own way. If you press a certain button while Dancing, you can create a new form of your object!