Sims in San Myshuno are performing a strange ritual?

Were they sitting on a bench or were at a festival that was unloading?

I could be wrong, but is that one of the spots where someone is usually playing music for tips? Was someone nearby doing that when this was happening? If not, I wonder if that could be the cause somehow.

It's kinda the typical glitch action when sims are trying to do a particular thing, and its cancelled out in the glitch. It looks like it was happening several times. Your sims will do a "T stance" for a second, then reset. That's what you were seeing happening really fast over and over.

It's a lot funnier when you play 'chicken dance' in the background while this plays.

They totally look like chickens lol it's a strange glitch indeed, I never saw it in my game.