It's not a laughtrack...the live audience on KITH was always kind of like that. Towards the later seasons, someone would bust a gut over just about any little thing that seemed "weird" before the joke was even apparent.
Luckily, it didn't make the guys lazy and they kept writing good stuff, because I suspect the show could have easily remained just as popular even with crap skits because people in Canada seemed to fall on the floor laughing when the guys just walked on the set with a funny costume.
That even happened to Bill Hicks on the first release of "Sane Man." Kevin Booth added some laughter to Bill's standup, mainly to cover up the crap audio quality.