yes. you can translate you to ty=German du or wy= German ihr,

If a sentence has more than two words, się tends to be inside the sentence.

It doesn't sound right.

The only situations when "Russian mistake" will indeed be a mistake, will be when it results with "się" ending up as a last word in the sentence. This is a mistake unless the sentence is 2-3 words long. Otherwise, "się" is just movable. You can have a correct sentence with "się" and its verb being 10 words apart.

Both sentences are correct in Polish. But...

Polish words have stress on the penultimate syllable and unfortunately one syllable pronouns (się, mi, cię) must adapt to the rhythm of the sentence. SIĘ is mute (doesn't have an accent) so it must connect with other words, often other one syllable word in the sentece (because of this it can't be at the beginning and at the end of the sentence).

Proper Polish sentence is: "Z czego się-Pan śmieje? - You met some man who was laughing, and you want to know why? - Do you see (hear): się puts accent on the action.

You can say: Z czego Pan-się śmieje? - But the accent is on the person Pan not on the action. This is used when there something happened and some guy started laughing at it, but you don't think that this is the laughable situation.

But look at this: Z czego on-się śmieje? - On is a subject (Pan is polite return) so should be at accented position, don't use: Z czego się-on śmieje?

Z czego się-śmiejesz? - Się is not at the beginning or at the end of the sentence.
Z czego Ty-się śmiejesz? - The same case as with Z czego Pan się śmieje? - Ty is not mandatory, so you wanted to mark that action of this person is different from yours.

Unfortunately Duolingo don't teach you intonation of the Polish sentences (so we can only write what the possible context is). Good luck with Polish :)

PS. In Polish there are some reflexive only verbs (ALWAYS with się):

• bać się - to be afraid, to fear
• dziać się / dzieje się 3SG - go on, it is happening
• podobać się - to be pleasing, to like
• starać się - to try
• śmiać się - to laugh
• wydawać się / wydaje się 3SG - it seem
• zdarzyć się / zdarzy się 3 SG - it will happen, occur

się is after this verbs, when this verbs don't occur at the end of the sentence. (exc. "mi, ci, mu, jej, nam, wam, im" in situation: verb pronoun-się)

Proper: On śmieje-się z siebie. and "less" "On-się śmieje z siebie.

Well... it's complicated. In theory, both sides of the verb should be ok (unless 'się' ends up at the beginning or at the end), but sometimes one option just sounds bad although it's hard to say why.

"Z czego pan się śmieje" was the one marked wrong. But I think it's okay. Sounds a bit worse to me, but ok. Added now.

With "On się śmieje z siebie" it also sounds okayish to me, although worse than "On śmieje się z siebie". It sounds a bit like an explanation of 'at whom' he is laughing. But still, it looks correct.

This sentence seems to be based on the singular version, i.e. "śmiejesz".

"śmieje" can be used for Formal You, when talking to one person.