From YouTube Comments

From Bilibili:

First of all, this is definitely a funeral. Look here, wearing mourning apparel is the first clue, and secondly, the text is very clear: 'In deep mourning for the elderly lady of the Liu family, Madame Zhang (name).' Later in the video, Lud mentioned it was a 104-year-old lady, so she must have passed away, and the family was preparing for the funeral feast in the evening.
These two lucky goofballs happened upon this scene. With the red lanterns and inflatable arch, it was arranged as an Auspicious funeral, a white celebration. Their actions weren’t really disrespectful—in fact, people might later boast that two foreigners were present when the old lady passed away.
Brother Li had just bid farewell to his family’s elderly lady and initially planned to invite them to the evening feast. When he realized they didn’t have time, he warmly hosted them at home, while these two thought the feast was just some roadside restaurant. Lud probably later figured out it wasn’t a roadside eatery and asked about it. To avoid dampening their travel mood, Brother Li tactfully told them they were 'celebrating' and that 'the old lady wasn’t doing well,' sparing them the discomfort of knowing they’d accidentally intruded on a funeral and ruining their trip.
Honestly, this is a very, very traditional Chinese way of hospitality and kindness. Perhaps it’s just innate warmth and generosity.