This sentence is not very clear: was it the preschoolers who were waiting for the nice man or was everyone waiting for him? This can be interpreted either way but it does
not say that the man described a scene while he was watching a film; he's describing a time when he was watching a film about or even made by the preschoolers.
It's hard to say without more context, but the way I understand it is that:
The man gets everybody laughing as [by the means of]
--he [the man, the main subject] describes watching [he was doing the watching at some time in the past and now is describing this past watching] a film of the preschoolers
----while they [the preschoolers] waited for the nice man to come back.
It could be that the people waiting for the nice man to come back are "the man and everybody" and not the preschoolers, but I think that the use of the past tense suggests it's the preschoolers in the film he's describing that were doing the watching, not the man and his audience.