He or she (given the nature of the poem and what I've read of the poet, I think it's safe to assume the character is male) "dances naked" by himself, which brings to mind a sort of freedom and carefree energy, and then he hammers a near-morbid reality into our mind with the word "grotesquely." He then waves his shirt around his head and begins to sing. But instead of the up-beat Bon Jovi-esque ballad one might expect, his song starts out somber and somewhat sad. Williams quickly rectifies this by ending the song with the dancer's exclaimed affirmation of joy at his circumstances. There are more traps laid within this poem in more subtle ways as well.
This abrupt switch that occurs brings to mind the idea of perceptions--those we have of ourselves, those that others hold for us, and the chasm that can lie between the two. Even the end of the poem points me in this direction. This man asks a rhetorical question. "If I admire [my features]...against the yellow drawn shades,-- / Who shall say I am not / the happy genius of my household?" He knows he may not appear to be the most attractive to onlookers, but in this moment--where he is his only judge--he reinforces the approval of the one person whose opinion of himself he should truly care about--himself.
I found his poem extremely refreshing. Personally, I feel that the sort of self-discovery and internal sense of approval and worth expressed here are ever more difficult to cultivate in our time. The way I see it, there will come a day when we will be alone in our room with the blinds closed no matter what. We can take what seems like a risk by trying the exercise now and maybe being a bit frightened by the reality of our lives, or we can wait until the moment happens to us and live with the person we've become at that point.
Thanks for reading!
"Danse Russe" by William Carlos Williams @ PoetryFoundation:
http://www.poetryfoundation.org/poem/175782