There's been tests done to see if LSD can help with things like depression, social anxiety, alcoholism, etc. and from what I remember the results were positive. But research was moving slowly due to various roadblocks put up by various governments in the name of the war on drugs or whatever.
I wouldn't be surprised if the dancing plague was.. okay, here's my latest theory:
What if the guy who usually delivers mushrooms and other edibles to the town picked the wrong kind of mushroom. I know, a mushroom guy should know his mushrooms, but maybe he was desperate or something. Or somebody maybe sold him a batch of mushrooms and he was just the middleman.
Either way, the mushrooms arrive at this town's market, and people start buying them. There is a big feast, a lot of people there, mushroom soup is served, and a whole bunch of people eat these "funny" mushrooms at the same time. Next thing you know everybody's starting to peak at the same time. Hundreds of people all feeling funny, and so.. It seems like people are going to start looking at their hands, standing up, walking around, trying to talk and being confused by how weird everything was getting. It can't just be in their heads! Everybody is seeing it, from their pov, so they would all be caught up in this weird fantastical phenomenon. And then some guy just .. breaks into dance. I mean.. You can also expect people lying down, laughing, feeling their faces, hugging trees, etc. But at some point one of these people dancing is definitely not something that sounds outlandish. In fact it sounds like something that is probably just going to happen. If you have 400 people on drugs just standing around, odds are that at least one of them is eventually going to start dancing, with or without music. In fact I would guess what happened was people started playing instruments and/or forming impromptu bands. There you go, next thing that happens after some guy starts beating a drum is another guy dancing to it.
And once one person is dancing, and committed to dancing, then that's really all you need. That's the catalyst. After that people will just start joining in. If everybody was sober, it could go either way, but if everyone's on mushrooms, and they don't know that they're on mushrooms, and most people probably think it's some divine thing that's happening, and they see a guy dancing.. Somebody's going to join in. I mean, everybody's confused, and this guy is dancing. He looks happy and in control. He must obviously be onto something. And so then another person joins in.. and another.. And all of a sudden you have a whole bunch of people dancing and probably having a lot of fun. Once that group dynamic starts, it would be hard to stop.
Then somebody yells: "Who wants more mushroom soup? I brought some more. There's also beer!"
And so at that point in everyone's minds it's Dance day and that's just what you do. You keep dancing because that's what's happening and that's that. It was meant to be, so they danced until people started dying.