This is an event I first heard about in conjunction with a rave, and recently had the pleasure of experiencing for myself on December 31, 2001 through the next afternoon.
A Puddle of Love is just what it sounds like, comparable to an orgy, not necessarily sexual, but hopefully. Imagine a large group of people with serotonin flooding through their brains (see MDMA). The traditional barrier of a personal bubble is melted away and love is instantly associated with the sense of touch. Now put them together with a waterbed and you have a cuddly pile of flesh - playing with hair, rubbing backs(etc.), and essentially having a wonderful time being together.
The next day can be described as a wonderful afterglow, inevitably leading to more backrubs and cuddling.
Personally, I enjoyed this smaller, more personal experience with people that I knew and trusted. Appropriate addendum's to this would include a compare and contrast with a rave experience, involving a larger group of strangers.