Touching performance in a hat (7)
I believe the answer is:
tactile
'touching' is the definition.
(I've seen this before)
'performance in a hat' is the wordplay.
'performance' becomes 'act' (act is a kind of performance).
'in' means one lot of letters goes inside another.
'a hat' becomes 'tile' (I've seen this before).
'act' placed within 'tile' is 'TACTILE'.
(Other definitions for tactile that I've seen before include "Using the sense of touch as in lattice" , "Touchy" , "Tangible - of touch" , "Lattice being sensitive to touch" , "Given to touching" .)