Admittedly, this is can be somewhat off-putting because the smile doesn't reach their eyes, so perhaps they are just mimicking us, but whatever it is they are indicating an understanding that a joke is intended, beyond normal happiness and play.
However, I have a pet* theory that the long evolutionary history of dogs with humans has little by little made their facial expressions converge towards reasonable approximations of human expressions. Which of the ancestors of modern dogs were more likely to survive in the company of humans: those whose expression looked human-happy when the dog was feeling a positive canine emotion? Or those whose expression looked human-happy when they were feeling aggressive, fearful, disappointed, etc?
* No pun intended
In this case it's pretty mundane probably, she's using something more expressive to humans and it's happened to work well, but it still imparts on me that a dog living among humans picks up some pretty different signalling
Intriguing perhaps, but then I expect most dogs would be intrigued as well.