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This is mentioned by Imam adh-Dhahabi (may Allah have mercy upon him) in Siyar ‘Alaam an-Nubala (12/444). The wording that this translation mentions is not correct. There is no mention of dancing. The wording is:
قَالَ : رَوَيْتُ يَوْمًا حَدِيثًا ، فَنَظَرْتُ إِلَيْكَ ، وَقَدْ أُعْجِبْتَ بِهِ ، وَأَنْتَ تُحَرِّكُ رَأْسَكَ وَيَدَكَ ، فَتَبَسَّمْتُ مِنْ ذَلِكَ
“And I was narrating Hadith one day and I looked at you. And you were amazed with it and you were moving your head and hand. So I smiled due to that…”.
So this is the correct word that Ma’shar was moving his hand and head out of approval for the Hadith (and he is one who has weak eyesight), not that he was dancing.
And Allah knows best
Faisal bin Abdul Qaadir bin Hassan