It really depends on the show and the situation. In most comedies, I find it wonderful because it's usually in the spirit of the show and it reminds the audience how special live theatre can be. It's not like they get to see the "bonus features" of a Broadway show.
Now if it were a farce like Noises Off, where it would break the timing, it could be a potential disaster that could seriously halt the momentum required to make the show work. Of course, in a dramatic production, it's simply fatal. I can't imagine Streetcar or Equus in which an actor bursts out in a fit of giggles.
I've only seen it happen twice - both in London. The first was My Fair Lady when Martine McCutcheon and Jonathan Pryce lost it during the diction sequence, but I was too far away to see what had happened. It had the audience roaring and it did not go on very long. The second was in the review All You Need Is Love and it was during a somewhat serious moment. But given there was no real plot, it truly was funny to watch because the two actors kept having to look each other lovingly in the face. Anyone who's ever been in this situation knows this only makes things worse. I couldn't stop laughing myself.
"What can you expect from a bunch of seitan worshippers?" - Reginald Tresilian