Dancing in red fez, extremely agitated (8)
I believe the answer is:
frenzied
'extremely agitated' is the definition.
(someone in a frenzy is very agitated)
'dancing in red fez' is the wordplay.
'dancing' indicates an anagram.
'in'+'red'+'fez'='inredfez'
'inredfez' is an anagram of 'FRENZIED'.
(Other definitions for frenzied that I've seen before include "Wildly excited or agitated" , "Violently agitated" , "Frenetic" .)