This scene is from the hilarious and tragic 'La Vita è Bella' ("Life is Beautiful"). It's plot centres around an Italian Jew named Guido who is taken, along with his family, to a concentration camp following the spread of Nazism's shadow over Italy. Guido is established early on as a slapstick character that can find the funny side of anything. Once he is in the infamous striped pyjamas he is determined to keep up appearances for his son's sake and turn the concentration camp into a game.
The juxtaposition of Guido's silliness with the horror surrounding them is a striking contrast. Seeing the holocaust through the eyes of an innocent child is also an extremely effective lens through which to view something so tragic (as also recently shown in 'The Boy in the Striped Pyjamas'). At it's core this movie is about a father protecting his son and insisting that life is beautiful even though everything around them screams the contrary. At first glance some people would say that Benigni's performance is daft and that he overacts, but his entire performance is laced with desperation, fear and anguish (his mouth is smiling but his eyes are often not). This is an incredibly fine line to walk and ultimately why he is one of only three people to have ever won the Best Actor oscar for a role in a non-english speaking movie. Superb.