The talent show is an event taking place before the events of Children involving Daniel Chesser, where he "lost control of himself" and most likely embarrassed himself in front of an audience, explaining his nervousness towards performing as Freddy Fazbear later in the afterlife. Not much is known as to what exactly happened, as it is only mentioned briefly.
The talent show was first directly mentioned in Part 113 when Daniel compares it to how Bianca lost control of herself when killing the guard and telling the others about it. Bianca tells him that he doesn't have to remember it, but in Part 114 Sammy brings it up again asks what exactly happened, so Bianca tells him that it's a personal thing and that he should be more considerate.
It was likely indirectly mentioned earlier in Part 68 where Daniel reassures himself that his performance with Freddy is "not gonna end up like last time."