During Walpurgis Night, why did Mephistopheles and Faust hide and then later join the festivities?
Walpurgis Night come from the German tradition about witches, and is supposedly the day when the connection between the living and the dead is strong. (The inclusion of this festival, which does not occur in other version of the Faust tale, is part of Goethe's attempt to make Faust's story relevant to Germany.)
The reason why Faust hides is that the sordid characters and the evil the participants embody is sinful. Faust does not wish to acknowledge this part of his nature, or even that Good and Evil exist at all. Mephistopheles plays on Faust's pride, taunting his prey when he hides, and at the same time, promising Faust even more knowledge, which the man craves:
Mephistopheles: Look at that flame of varying hue!
There sits a merry click for you.
No feeling lonesome at a small affair.
Ther flocks the crowd to Evil-kind (Satan);
There many a riddle should unfurl (4034-40).
Mephistopheles is successful in his attack on Faust's hubris; he convinces Faust to come out of hiding. As if to sweeten the deal, he then parades women of greatness and beauty from the past, appealing to Faust's mortal lust as well as, once again, his desire for knowledge. From their hiding places, Mephisto tempts him,
"Take a good look at her!
Adam's first wife.
Here's a new dance; come on, it's time we repose" (4116-27).
Convinced by the minion's subterfuge, Faust joins in the dancing.