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To the above commenter, Lily Tomlin and Meryl Streep were doing a bit on Altman's style of overlapping dialogue, where the characters interrupt and talk past each other and repeat each other's phrases. I thought it was pretty funny, and I think the audience was laughing because Tomlin and Streep were obviously having a good time trying to riff off each other.
I'll also say that I despise this trend towards extreme thinness -- it's grotesque. Come on, ladies, not everyone can look like Keira Knightly, so take a cue from Salma Hayek, who is curvy and could not possibly be more beautiful!