Because kids and teens can dance "the smustle", the "dance together" adds frienship points, and is considerred as a romantic action.
If you look at the moves of the "dance together" - they are quite sexy...
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From NL and on, my sims dance only the smustle, and enjoy it a lot.
Edit: especially the "Elvis Presley" move of the hips.
Gali, I've had my teens 'dance together' with their teen brothers/sisters/cousins post-NL. This indicates that Maxis don't consider it a romantic interaction, and I don't see why they stopped 'dancing together' with older generations.
Your sims dance only the smustle. Can you tell me if sims learn the 'bust a move' social and get the dance scholarship from dancing the smustle? I thought they only acquired dancing skill from 'dance together'