I believe that this is a symbolic representation of Clifton's newfound invisibility. Like he said during the scene with Ras, he has "fallen outside of history" and become something new. I interpreted the doll as what the people see as Clifton: just another black person who entertains. This fits the narrator's description of invisibility from the prologue almost perfectly, and ironically, it is the narrator who doesn't notice Clifton's invisibility. The smirk that Clifton gives to the narrator is a mocking smile because Clifton has finally realized his invisibility and he knows that the narrator is still trapped without this knowledge. Clifton has put forth this doll that people, including the narrator, see and by making this new "persona", he has effectively made himself invisible. Clifton has become his own puppet master.
Was this scene meant to be a learning experience for the narrator? As seen in many scenes before, the narrator gathers the most useful information from unexpected sources and perhaps this is the beginning of the end of the narrator's story of his recognition of invisibility.