The very uncomfortable sympathetic feeling experienced while you watch someone else embarrassing themselves. This feeling is often intensified when the person embarrassing themself is not aware of how embarrassing their behavior is. In this case it is more like you are feeling the embarrassment on their behalf.
George: OMG, dude...this talent show is killing me. The fat girl dancing to 'Ice, Ice, Baby'...
Dude: I know man, I know...all the wrong things are jiggling--
George: --And her dancing! Everyone is laughing and she just keeps going. It's like a trainwreck right now. I don't even want to watch!
Dude: Total vicarious embarrassment right now, man.
George: Ugh. Let me know when it's over.
A 'better' alternative to using the word 'crazy' or 'insane' to someone. Or just a fun way to call someone crazy. Also, 'mentally jolly' can be used. From the Family Guy episode 'The Fat Guy Strangler'.
"Dr, is my brother really insane?"
"Mrs Griffin, we don't use the word 'insane', we prefer the term 'mentally hilarious'"