He mistook them for Sid Vicious, a member of the punk rock band the Sex Pistols, and Nancy Spungen, his girlfriend. Courtney Love had wanted to play the role of Nancy in a film about Sid and Nancy, but was given a more minor role. From Wikipedia: Courtney Love recorded an infamous video audition in which she exclaimed, "I am Nancy Spungen." Cox was impressed by Love's audition, but has said the film's investors insisted on an experienced actress for the co-leading role. Therefore, instead, Love was cast in the relatively minor role of Gretchen (a part that Cox wrote specifically for her benefit), one of Sid and Nancy's New York junkie friends.[citation needed] Cox would later cast Love as one of the leads in his movie Straight to Hell (1987).[citation needed] Coincidentally, Love would be compared to Spungen later in life on account of her marriage to Kurt Cobain.[citation needed] https://en.wikipedia.org/wiki/Sid_and_Nancy#Cast

It is difficult to answer without more context; however, here are some speculations: First of all, "erupt" is the word used for when a volcano begins shooting fire and molten lava into the air. In this scenario, the girl was about to "erupt" with laughter (or "explode" with laughter). Second, the girl might just think it is funny that the other person at the restaurant thought they were someone they were not. Or, depending on the rest of the story, Sid and Nancy could be other characters in the story. In that case, the girl simply thinks it is funny that the person in the restaurant would think they were Sid and Nancy. However, there is no underlying meaning behind "Sid and Nancy" that I can see.