The most common and most likely answer to this crossword clue is the 7 letter word DISCOED
D
I
S
C
O
E
D
Buddy explains!

The straight part
We know that "Danced" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case danced = discoed.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does DISCOED mean?
DISCOED verb- To dance disco-style dances.
- To go to discotheques.