The clowns celebrate their success and toast Dumbo. So far the clowns are the only characters beside Timothy to say anything nice about the elephant.
This sequence is wholly animated by Berny Wolf. Take a look at the shapes of the characters in shot 3. The balloon construction could come out of an early '30s Ub Iwerks cartoon, where Wolf worked prior to Disney. Wolf was certainly capable of work more sophisticated than he did at Iwerks; he animated a good chunk of Jiminy Cricket in Pinocchio. While the designs might be a throwback, the animation is advanced. The poses have beautiful lines of action and read clearly in silhouette. Wolf keeps the arms away from the body so that there is never confusion about the pose. There's great graphic clarity here.
Note that there are two colour tones of silhouette, which prevents background elements in shot 3 or the crowd of clowns at the end of shot 6 from being visually confusing. Even viewing the small thumbnails above, there's no confusion as to what is happening on screen.
Billy Bletcher, who was the voice of the Big Bad Wolf in The Three Little Pigs and the voice of Peg Leg Pete in the Mickey Mouse series, makes a cameo appearance here. He's the voice of the clown in shot 2 and is probably also the voice in shot 4.