So tell me all you NYC people, would 2 people really just start singing (and dancing) with a street performer and then have the crowd join in dancing?
Actually yes.
Something about this city brings out the unabashed abandon in people. Normal decorum that is expected in the streets of Iowa or wherever, (nothing against Iowa
) goes out the window in the anonymity of the big city.
Plus, you only have to walk a few blocks around the Times Square area to see how wacky, crazy & zany everyone is, from someone shouting from a megaphone that the end of the world is coming, to seeing an Elmo costume character wandering about, to someone skittishly selling faux "designer" watches out of a briefcase, and you realize everything goes here. So yes, some of them join in on some fun, singing & dancing in the street with the street performers.
Plus, I think many of them joining in are wannabe actors & singers. Someone is always hoping to be discovered here. Or they have such a hunger to be acknowledged and noticed that they will use any opportunity to perform, whether anyone wanted them to or not.
There is a famous line in Neil Simon's film,
The Googbye Girl, "Ask an actor a question and he tells you his credits."
I personally worry about being bumped by a pickpocket and stealing my wallet during a big street crowd scene like that. Except I've learned not to keep my wallet anywhere they can nab, and my purse is firmly zipped and I don't stand inside the crowd if I'm watching anything.
Or if I have, I haven't seen him enough to register as someone there regularly. I probably thought of him along the same vein as the various musicians who play on some subway platforms. There temporarily to make some money, but switching to different stations and not anything permanent so I'd say, "Oh there is that guy again with the dancing bears!" 
Yeah, I noticed them after that, and realized that one song was actually the only song they played in public. They would play it for 5 minutes. Stop, sell some cassettes, then move onto another street corner with different people, or wait till that subway left, and then started playing the one song again. They knew the rest of their songs were crap. 
He directed the play and he directed the pilot of Smash.
