To unlock this skill you need the Stomp ability, and your alt fire high enough that it melts steel to reach the final golden barrel. You also need 1337 golden coins to purchase it.
Happiness is a skill that increases your jumping ability so much, that it allows you to go anywhere, even to the end of the game before your supposed to. Which is why the last alt fire upgrade you need to melt steel was moved to the area with the last boss.
In red town there is a locked door with 1 white crystal. Grab a hanging gold crystal, and using the coloring machine turn it white and place it in the missing slot to open the door. then shoot the button to open the next door.
In the next large open section is a button you can press. this spawns two glowing balls of light and around 8 waves of enemies. If an enemy reaches one of the glowing balls of light you lose health. too many reach it and you fail and die.
There is a cheesy way to make this battle easier. Grab the two sponges from the village and use them to place a force beam in front of the two balls of light to block the enemy from reaching them.
Kill all the waves and a door from the area the enemies were coming from will open. stomp the floor, melt the metal and grab the barrel and take it to the store.
You can now buy the skill making exploration very easy :P