According to the YouTube uploader, this takes place on Hollywood Boulevard, which might explain at least one mystery -- we hear strange shit like this is pretty much commonplace on that particular stretch of road. And if we were forced to speculate, we'd guess the polar bear's presence has something to do with Hurley's reign as protector of the island -- he seems like the sort that would teach a polar bear to play the accordion and free him to pursue his life's ambition of becoming a Hollywood street busker. Guess we'll have to wait until the Lost DVDs release to know for sure.
In any case, it's a pretty soulful rendition of the "Life & Death" theme from the series, especially considering it comes from a polar bear playing what appears to be some sort of novelty or kid's accordion.