I figure Oscar takes one bath a year, and makes a real occasion out of it. He clearly enjoys dancing.
It seems pretty obvious to me that Frank Oz was not available when they were shooting this, which would explain the noticeable (and much-felt) absence of Grover and Cookie. Their not being there is all that keeps this little number from perfection.
Bert was clearly done by someone else.
Elmo had already assumed regular character status in 1986 (I think that's when this was shot), so it's no surprise he's there. If you notice, though, he's the only character without his own lyric.
I've always really wondered how, exactly, Ernie worded it when he invited everyone to this little get-together. Think about it...kind of an unusual party...
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