Dance with nothing on? Swell! (7)
I believe the answer is:
balloon
'swell' is the definition.
(thesaurus)
'dance with nothing on?' is the wordplay.
'dance' becomes 'ball' (ball is a kind of dance).
'with nothing' becomes 'o' (I've seen this in other clues).
'ball'+'o'+'on'='BALLOON'
(Other definitions for balloon that I've seen before include "Become inflated" , "Air transport" , "Inflatable sphere, may contain hot air" , "Air-filled bag" , "See 21" .)