That's from the time Loki turned an entire street into sweets as part of a cunning plan called "annoying the s**t out of Thor." Now, we know Loki is supposed to be a trickster god, but the story titled "The Vengeance of Loki!" from Journey Into Mystery #88 might be one of the most ham-handed slapstick bad-guy plots ever engineered. Loki starts by summoning a tiger to attack Thor's romantic interest, Jane Foster, who is an intrepid nurse instead of an intrepid astrophysicist in this version.
Her greatest aspiration was polishing Thor's hammer.
By attacking Jane, Loki forces Thor to let go of his hammer for more than a minute -- which, as we've covered before, causes the mighty god of thunder to turn into a puny doctor named Don Blake. Loki encases the hammer in an impenetrable force field, leaving Thor powerless. Now Loki is free to do whatever the hell he wants ... and the best thing he can think of, apparently, is turning stuff into ice cream and candy. And then for good measure, he also transforms a bunch of people into colorless beings, thereby realizing the same goals of the baddies in Rainbow Brite.
"Hey, Stan, what if in this issue some people turn into blank outlines?"
"What if you draw a full comic for once, you lazy bastard?"