When the app starts, press to move over to ‘Library’ and select ‘Interactive Episodes’.
This is unlocked in Episode 4, ‘Siblings’, Chapter 7, ‘Elmo’s World: Birthdays’.
At one point in the chapter, many things will appear on the screen for you to “touch” while you are standing on a birthday cake for the first time. When a unicorn piñata appears on your left (facing the screen), keep hitting it with your hands and it will eventually break.
This actually happens twice in this chapter. The second time is when Elmo is reminiscing about being born. When he is celebrating one of his birthdays, another piñata will appear. Again, swipe at it with your arms until it breaks. It is not known if you have to break both piñatas, but I would do it just in case.
The simplest way to unlock this achievement is using ‘Chapter Select’ to choose the chapter. When the chapter is over and the next one starts, just press , move over to ‘Stop’ and press again. The achievement will unlock when it is buffering. You can alternatively watch the entire episode, but that would be more time consuming.