Here, "grinned" is used to describe the wide smile on the audience's faces, indicating their amusement.
Here are some more examples:
* She grinned at him mischievously, knowing she had a secret.
* He grinned with pride as his daughter walked across the stage to receive her award.
* The children grinned eagerly as they waited for their ice cream.
Let me know if you'd like to see more examples, or if you have a specific scenario in mind!