This idea from John Keats 'Ode on a Grecian Urn' is about time. The characters are happy because this moment of joy will never be taken away from them - they are in a time-warp picture placed on the urn by the artist. So the celebratory procession will go on forever, the music will never stop even though we won't be there any more to hear it (those 'melodies' unheard are sweeter) the musicians won't get old and feeble and clumsy, the sweethearts will never get to know each other and fall out of love through common human failings, the leaves on the boughs of the trees will never turn brown, wither and die as we will die. Of course the real people the picture represented Did die! Time moves on and takes us,as we are now, with it. The artist died, we will die and Keats the poet died! Some astro-physicists might argue with that but that's a whole new scientific genre/argument!
The word "happy" is foregrounded in the third stanza of Keats' "Ode on a Grecian Urn" by being repeated six times. However, the word 'happy' has been used to convey the following different meanings:
1. Ah, happy, happy boughs! that cannot shed
Your leaves, nor ever bid the spring adieu;
In this context, 'happy' means 'fortunate.' Unlike in real life when the trees shed their leaves in autumn, the branches of the trees on the marble urn enjoy a blessed and fortunate state because they will be unaffected by the changes in the seasons. It is perpetually spring in the world of art.
2. And, happy melodist, unwearied,
For ever piping songs for ever new;
In this context, 'happy' means both fortunate and 'pleasurable.' In real life a musician will at some point or the other during his musical concert become tired and exhausted. He cannot play on and on forever. He has to stop playing at some point or the other. However, the musician on the marble urn can play on forever and forever without becoming tired because he is fortunate in being frozen in art and time on the sides of the marble urn. Hence, he can enjoy forever the music that he produces and simultaneously stimulate the imagination of the people in the real world who see him on the side of the marble urn to imagine for themselves the music that he is playing. When we listen to music in the real world we have to pay attention to only that musical score and melody which is being played by the musician; but in the realm of art the contrary is true. We can see the picture of the musician on the side of the marble urn and we can imagine for ourselves to our own liking and taste the music and the melody which the musician on the marble urn is playing.
The possibilities of aesthetic pleasure which the marble urn offers are infinite unlike in the real world where pleasure is finite and has to come to an end sooner or later. There is no limit to the human imagination. That is why Keats asserts,
Heard melodies are sweet, but those unheard
Are sweeter: therefore, ye soft pipes, play on;
3. More happy love! more happy, happy love!
For ever warm and still to be enjoy'd,
In this context when he describes the picture of the pair of lovers frozen forever on the sides of the marble urn, he repeats 'happy' thrice to emphasize the vast difference between love in the real world and love in the world of art. In the real world there is always the possibility of love coming to an abrupt end due to various reasons like death, infidelity,sickness, boredom etc. but not so in the case of the lovers on the marble urn who have been frozen in time forever. The word 'happy' in this context refers not merely to being fortunate, or giving pleasure but also 'apt' and 'appropriate.'
Keats means to assert that because love in the world of art can never be consummated and thus reach its end, it only is the real and true love and earthly love is not love at all because once it is consummated it is over.