Does anyone do either in the world of the witcher? Seems like everyone's too serious or sarcastic most of the time.

Geralt has this creepy smile sometimes. Triss/Ves laughed at Geralt's drunken exploits. First chat at inn after saving those two fools from the gallows.

That being said, there are precious few of those moments. These are dark times.

Well, you need way more muscles for smiling than for frowning, so it's really hard to animate. A lot of games just go the easy route and leave it out completely, instead of risking to end up with a baring of teeth that doesn't feel friendly or a smirk that looks sarcastic rather than nice/joyful.

Dwarves are rather humorous.

I think a lot of real smiling and laughing and joy is expressed through people's eyes and that is something that is extremely difficult to animate and correctly do in art (especially moving art like a computer game).

If you take Iovorth's path in Chapter 2 some dwarves, Dandelion, and Geralt hang out in the inn for a bit and talk and they laugh and crack jokes a bunch. I liked that (even if all the humor was super crude).

Zoltan and whores.