When Pinkie's friends are frightened by a grove of trees that are enchanted by Nightmare Moon to give them scary faces, Pinkie sings the song to show them that fear can be defeated just by laughing at it–a lesson that would lead Twilight Sparkle to realize that Pinkie embodied the element of laughter.
When I was a little filly and the sun was going down...
Twilight Sparkle: Tell me she's not...
The darkness and the shadows, they would always make me frown...
Rarity: She is.
I'd hide under my pillow
From what I thought I saw
But Granny Pie said that wasn't the way
To deal with fears at all
Rainbow Dash: Then what is?
She said: "Pinkie, you gotta stand up tall
Learn to face your fears
You'll see that they can't hurt you
Just laugh to make them disappear."
Ha! Ha! Ha!
So, giggle at the ghostly
Guffaw at the grossly
Crack up at the creepy
Whoop it up with the weepy
Chortle at the kooky
Snortle at the spooky
And tell that big dumb scary face to take a hike and leave you alone and if he thinks he can scare you then he's got another thing coming and the very idea of such a thing just makes you wanna... hahahaha... heh...