First Night: A Midsummer Night's Dream - Sheridan Smith excels as pot-smoking Titania

David Walliams draws laughs as Bottom in the Michael Grandage production

They've been presented, in recent years, as everything from a bevy of bolshy St. Trinian's types in tutus and Doc Martens to a gang of faintly menacing Indian street performers. Now, in his enjoyable revival of A Midsummer Night's Dream, Michael Grandage re-imagines the fairies as a troupe of pot-smoking hippies.

Christopher Oram's vivid design turns the magic forest into an eerily abandoned manor house, replete with a rusty spiral staircase leading to Titania's bower and dominated by vast moon that glares balefully through the bombed-out back wall.

Looking like a slightly sanitised group audition for Hair, the sprites haunt this place, creating a hedonistic, drug-fuelled counter-culture with their festival-of-love-style tribal dancing (there are sudden fleeting snatches of the Mamas and the Papas and Simon and Garfunkel). It's certainly a heady alternative to the formality of Athens evoked by tall, elegantly panelled screens in the first act.

Sporting a school-of-Janis-Joplin bedraggled mane, Sheridan Smith's excellent Titania is a 60s wild child, evincing a splendidly fiery spirit in her dispute over the page boy with Padraic Delaney's Irish-accented, insufficiently imposing Oberon and in her comic element when besotted by Bottom in donkey mode.

David Walliams stays well within the borders of Little Britain, playing the stage-struck weaver as a precious, sibilantly camp am-dram nut. Though he over-milks the Roman-costumed “Pyramus and Thisbe” performance, the actor is delightfully funny in the scene where, still cautiously wearing his L plates as a randy ass, this Bottom is relaxed by a slumped heap of spliff-passing sprites. As he gets stoned, he starts to giggle with inane pleasure at the daftness of the name “Mustardseed”.

Delaney and Smith double as Theseus and Hippolyta and the rude mechanicals moonlight as the fairies, but here you don't get a strong enough sense that the dream world of the forest reveals the repressed desires and fears of the mortals, or that Oberon and Titania may be the proxy-selves through whom the human couple are prepared for marriage. That's because the opening scene is under-explored. Grandage leaves us guessing about how Smith's Hippolyta, enigmatic in her smart gray suit and fur stole, feels about the death threat levelled by her betrothed at Hermia. There should be a more detailed impression of the tensions in the relationship that need to be resolved.

The quartet of young lovers are extremely winning (especially Katherine Kingsley's leggy, frantically frustrated Helena) and their rowdy slapstick scrapping soon reduces them to their dazzlingly white undies.

But for all the fetching bare flesh and toned torsos on display, there's something curiously antiseptic about these libidinous larks. And the reconciliation of Oberon and Titania – who smooch to the strains of The Carpenters' “Touch Me When We're Dancing” – keeps eroticism within the safe limits of the tongue-in-cheek. When Smith's fairy queen reports: “Methought I was enamoured of an ass”, she does so with an amused sang-froid, as if the idea can be easily shrugged off, and the production – the penultimate in the Grandage Company's season at the Noel Coward Theatre – is, in the final analysis, a bit too tame, despite the hippies, to release the full wondrously disruptive power of the dream world or reverberate with the after-tremors of its transforming experience.

It's undeniably attractive but the spell it casts is not deep.

Sheridan Smith gives a sultry pose (Johan Persson)