Snacks will make it happy, but increase its weight. Use only when it's not heavy enough to play games, or you don't have enough time to play games.
Winning games will make it happy, and earn Gotchi points.
If you feed it its favorite food, it'll become happy. But if you feed it the food it hates the most, it'll loose all its happy hearts.
If you set it on the potty when it needs to go, you'll make it happy.