This achievement takes place in Stonefield and counts for the Stonefield zone. Stonefield is the third zone for the Defiants, a 20-27 zone, and is equivalent to Gloamwood to the Guardians. Guardians can obtain this achievement as well.
When you arrive at the location of the dancing squirrels (4916, 4664) there are some squirrels randomly running around a torch. When you approach the torch (walk toward it) it will magically catch on fire and the squirrels will dance around it, in a circle. It is as if the squirrels worship it. Do the dance emotion by simply typing /dance in your chat frame to make your character dance.
Along with this achievement you will gain a new suffix title: Name, Dances With Squirrels.
So for example my character's name is Erik, so he'd be: Erik, Dances With Squirrels.
Approach the torch to light it. The squirrels will make a circle and begin dancing. /dance with them.