Destiny 2 Dance Party Key and the Loot-a-Palooza Key are two of the game's more mysterious items.
Mentioned as part of a pre-release leak but no where to be seen at launch, the Faction Rally update has seem them appear in the game under certain conditions.
Note the following mentioned specifics that could be considered spoilers for those who haven't completed the game yet, so read on at your own risk.
Destiny 2 Loot-a-Palooza Key explained
To get the Loot-a-Palooza Key, you must complete the Leviathan Raid. Upon investigating the loot chest at the end, there is a small chance it'll drop.
It's rare enough that not everyone in your Fireteam will get it - so it seems to be rather random, according to the first person who unlocked the key (Mythical Random) as seen here in this video by Rifle Gaming:
Once you have it, go to Dead Orbit in the Tower, and go behind their base to the small set of stairs behind (that only goes up on level, not the one that takes you far above to the Tower secret room) and access the console on the wall at the far end.
This will then trigger a Public Event in the Tower with the words: 'Cayde-6 has dropped treasure chests in the Tower. Have at 'em!'.
Follow the on-screen markers, which may take a bit of climbing. The above video (with footage by Mythical Random) shows the route you need to take, which might be useful since you have a time limit.
It seems that anyone can open the chest, but only the person who used the Loot-a-Palooza Key to trigger the event will receive the next piece of the puzzle - the Dance Party Key.
Destiny 2 Dance Party Key explained
So by completing the Loot-a-Palooza step above will you receive the Dance Party Key.
There are three places you can use this - in each of the three Faction Rally bases across the Tower (two in the Hangar, and one in the Bazaar) - at the consoles very close by.
It's up to you where you want to trigger it, though if you have aligned yourself with one of the three, then there could be a fitting place to do it.
Upon triggering, a Dance Party will occur at that location. Not only that, but a chest will spawn, giving you Legendary and Exotic gear. It also appears that other players can open the chest, too.
With the rewards received, time to put that dance animation of yours to good use!
We assume you can get this Key again if you manage to get another Loot-a-Palooza Key from completing the Raid, though it sounds like it's rare enough as it is.