It's from what is actually the first feature-length claymation movie. Made in Canada by Will Vinton, who is best known as the mastermind behind the California Raisins.
The movie was called "The Adventures of Mark Twain". Sounds innocuous enough.
This segment however, known as the Mysterious Stranger segment, is creepy and somewhat disturbing. It's hard to even imagine that this was intended as a kids movie. I think I'll never look at the California Raisins the same again.