This is the Hakodate Minato Matsuri, or Port Festival, which happens every August.
The Ika Odori, or Squid Dance, is a famous dance local to the port town of Hakodate (in southwestern Hokkaido, in northern Japan). Hundreds of people run and throw their hands up and kick their feet in unison to sort of resemble a squid, and the lyrics are about Hakodate's squid fishing industry and how tasty they are.
Japan has some fantastic summer festivals, but this was probably the strangest one I saw.
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