Newt is talking about "tickling the niffler." His friends, who are not familiar with nifflers, assume this is some kind of weird British euphemism for masturbation. Newt has no idea why they're all giggling as he talks.
Because Eddie Redmayne has the most quotable interviews: https://www.youtube.com/watch?v=sqx1E-JmYzM
Newt, his friends think "tickling the niffler" is a euphemism
Because Eddie Redmayne has the most quotable interviews: https://www.youtube.com/watch?v=sqx1E-JmYzM