Carol cracks up with laughter!
She and Peter were doing the "dueling guitarists," where they'd go back and forth on the stage, each one trying to stare the other down - kinda like a cross between a tango and a staring contest (a la Conan O'brien and Andy Richter)! They parried for a while, trading air kicks and guitar swings (sword attack?). In the end, Peter's intense (and hillarious!) expressions proved to be too much for Carol...