I think it's fair to say it's works for the same reason the laugh-track works.  Clearly we enjoy performances more when we're in the company of others visibly/audibly enjoying them.<p>My sometimes negative reaction to synthetic or real crowd approval combines two judgments: the material is awful, and the crowd is despicable in their approval of it (people sometimes viscerally hate laugh tracks).  If I like the performance, I won't be disgusted by the laugh track.