This pattern is used to tell someone (or yourself) that the present activity is inappropriate given the situation. It expresses urgency or criticism—like saying 'This is no time for that!' in English. The verb in the て-form must be an action that is ongoing (hence ている). You can use it with verbs like 遊ぶ, 寝る, 泣く, or 笑う.

A common variation is to add よ or ぞ for emphasis, but the plain form is fine for most conversations. It's often used in casual speech, but can be used in polite speech by adding です: ている場合じゃないです. It's not a formal written pattern—more for spoken language or dialogue.

Note that 場合 here means 'occasion' or 'time', so the literal meaning is 'this is not the occasion for doing~'. The nuance is that the action is a waste of time or inappropriate now.