Come, pipe a tune to dance to, lad.' (14)
This is Terence's friend's idea of a good time. He wants to hear some music he can dance to. Never mind that playing the pipe isn't really Terence's deal. This guy came to the bar to have a good time, to drink and joke and dance. He doesn't want a buzzkill like Terence reciting mopey songs and spoiling his fun. In a way, we can sort of see where this guy is coming from…
And faith, 'tis pleasant till 'tis past: (27)
This is pretty much Terence's idea of happiness in a nutshell. It's great while it lasts, but don't expect it to hang on for long. Pretty soon your fun (like getting drunk) will dry up. You can't count on happiness—better to bet on pain and disappointment. Some fun, huh?
Then the world seemed none so bad, And I myself a sterling lad; (33-34)
Here Terence remembers how great he felt on his big night of drinking at Ludlow fair. He imagines that the world is great, and that he himself is just terrific ("sterling"). We already know, though, that this is fake happiness, the kind of thing that just can't last. That's why he thinks we need sad poems, because they don't trick us the way booze does.