You can't insist that 你们 means "you guys" or "you people" in some questions, and in other questions insist that it means "you".

Be consistent. Or even better, be flexible.

"what are you people laughing at" should be accepted. Are you going to penalise me for trying to follow collective nouns or not?

This is my first time seeing this sentence structure. Do you say 你们在看什么? to ask "What are you looking at?" ?

"What are you laughing about"

Can I omit 在？then the sentence becomes 你们笑什么?

Is 你们 singular or plural?

would "What are you laughing about?" also be acceptable in english?

Rrrrrgh. Duolingo needs to add a Report option for, "This sentence repeated, even though I got it right the first time through, because there weren't enough model sentences to make a full lesson." This used to happen all the time in Swahili. C'mon, guys!

seems offensive/rude ? is there another way to say that...?

Xiao, typically means ""smile"', rather than "laugh"

你们的脸

Can what are you laughing for be accepted?

Technically 'What are you laughing at' should be 'At what are you laughing.' Duolingo, maybe include other acceptable idiomatic translations, such as 'Why are you laughing' or 'at what [or whom!] are you laughing.'

Why are you laughing