Kinda true, kinda not at the same time.
The early-90s were still fun and upbeat on the East Coast- what happened through those years was the music taking a more serious, hardcore turn. In that era, even if you were making a party record, you still had to be/look hardcore AF while doing it (see: Naughty, Dre & Snoop, Pac). Dancing was definitely out if you wanted to be taken serious- note how many artists who had dancers in the late-80s weren't incorporating them anymore by '93. Look at the stage performances... as good as a lot of that music was, most of those stage shows consisted of nothing but walking back and forth and rapping. There's actually not many acts from that era that put on good shows, and this was right after an era where almost everyone (LL, Doug E, KRS, Kane, Biz, PE, etc.) put on good shows. "Happy rap" was stamped corny, pop, etc. on all fronts by the time '92-'93 rolled around.
So East Coast hip-hop, for the most part, was either moody and hardcore (Wu, Bootcamp, Jeru, etc) or jazzy with a conscious/serious tone (Tribe, De La, GangStarr, etc.) and lyricism was very important. There was for sure a shortage of party records in that era period, whether from East, West, or South. You had your Nice & Smooth, Puba, Black Sheep, stuff like that which got played at parties, but it wasn't as "big" as the stuff that was going pop. You had stuff like Wreckx N Effect, Salt n Pepa, and whatnot, but that stuff wasn't getting played in the same realm. That was the radio side of rap (which was a much different side... those were like rap music that R&B heads liked). By '93-'94 you had to be hard or not. That's not just an East Coast thing though, that was all over.
Part of this was why Bad Boy was so successful, because it filled a void and inspired a change in East Coast rap... Puff's whole deal was that he was from that Golden Age late-'80s party era, and a partier himself, and party records weren't big anymore in '94 especially in NY. Everyone in rap to some degree was serious and hardcore by then... he wanted to put out serious hardcore shyt too, but his #1 thing was shyt that rocked parties and radio. It's the reason he made BIG do "Juicy", the reason he had Craig deviate from making grungy stuff to make "Flava In Ya Ear"... and that's also why it worked so well, because a lot of artists weren't on a party vibe by then. BIG didn't even move much or do any dancing, but he was a dope live performer when the emphasis on live performances had been downplayed. And then in the years that followed, more rappers in NY were doing party joints or songs aimed at the radio formula of the time- which most people credit/blame Bad Boy for. I also say the same about Method Man, Lost Boyz, Busta... they were standouts in that time because they made hard shyt but also definitely made songs people partied to.