We wouldn't ever say "everyone laughed out." Maybe "everyone was laughing." You could say "Everyone was laughing, so the atmosphere (of the room) was ebullient." or "Everyone was laughing, giving the room an ebullient atmosphere." However, I've NEVER heard an American use the word ebullient. If you're trying to use that word, fine. Otherwise, I'd say "The atmosphere was cheerful/joyful/lighthearted/lively and filled with laughter." Even better might be "The room was filled with joy and laughter."

Everyone was laughing - gives the sense of a continuing period of laughing, an ongoing thing..... Everyone laughed - gives the sense of something happend & everyone laughed. This might explain more what happened when someone made a mistake. It could get awkward, or people could laugh. In this case, it happened & people laughed. Depends on context, which is right for you.