"Why did the lady need to lift her knees?" - asked Billy Weeks way back in April 05, but thus far SFAICS without answer.

Why, as part of a lively dance, of course.

A 'knees-up' is a colloquial, mainly I think cockney, phrase for a lively party with drinking & [particularly] dancing. I have been unable to find a date for the phrase in any slang or standard dictionary [neither Partridge nor Oxford Dict (my edition) gives it, surprisingly: it is in Chambers, but that doesn't give a date ab quo]; so I cannot confirm what has always been my suspicion, that the phrase grew from the popularity of the song, rather than the song's referring to the application of a previously existent phrase: but it could, I suppose, have been vice-versa. In either event, I take it that the instruction to Mother Brown will have occurred at such an occasion, rather than in the course of her normal day-to-day avocations!

~Michael~