Every letter is transformed on its own, in reading order: scaled and rotated about its centre, sheared about the baseline, then shifted. Each amount is a maximum; with Random on, a seeded value between minus and plus that amount is drawn per letter, so the same seed gives the same party on any machine. With Random off, shift and rotate alternate sign and scale and shear are uniform. Auto space slides each transformed letter until it just touches the letters before it, so the word tightens like hand-set type. Because this runs before every other effect, the 3D walls, strokes and shadows follow the partied letters.
Party! is applied as an Illustrator live effect, so the text stays editable. Change the word, the font, or any slider afterwards, and save the result as a Graphic Style to reuse it.
How to rotate, scale and shift individual letters in Illustrator → walks through the manual Illustrator steps, then shows the one-click version.