Does it sound weird if I say "what is this traffic?"? How are these different?
Yes, you can actually say "what is this traffic" to indicate your surprise or confusion about why the traffic is so busy. The speaker has used "what is with this traffic" as "what is with/what's with" is used to mean "what's the reason" or "why." Although both are fine in this context, "what is with this traffic" sounds a little more natural and is more likely to be used by native speakers. You can use this expression in other informal contexts as well. Ex: What's with Judy? Why is she so angry? Ex: I don't know what's with this weather, but it's driving me crazy. First it's snowing one day, then it's sunny the next.