That is an adorable video, Seabreeze ! The colt is not actually smiling, even though that is exactly what it looks like. Horses groom each other, and right on the withers (neck/shoulder area) is one of the places that they often nuzzle and scratch each other.
You will often see two horses facing each other and scratching each other's back and neck, and that response is what this little ones is actually doing.
You can see, if you watch close, that she looks like she is chomping her little teeth together part of the time.