OK, first problem is that you have declared your following code:
root = Tk()
root.title("Lazy Button 2")
root.geometry("500x500")
app = Application(root)
root.mainloop()code here
inside the class itself. It should be outside, so this an indentation problem (maybe stackoverflow problem with indents?).
secondly I simplified the code to get it to run
from Tkinter import *
class Application(Frame):
"""A GUI application with three button"""
#create a class variable from the root (master):called by the constructor
def _init_(self, master):
self.master = master
#simple button construction
# create a button with chosen arguments
# pack it after the creation not in the middle or before
def create_widgets(self):
#"""Create three buttons"""
#Create first button
btn1 = Button(self.master, text = "I do nothing")
btn1.pack()
#Create second button
btn2 = Button(self.master, text = "T do nothing as well")
btn2.pack()
#Create third button
btn3=Button(self.master, text = "I do nothing as well as well")
btn3.pack()
#must be outside class definition but probably due to stackoverlow
root = Tk()
root.title("Lazy Button 2")
root.geometry("500x500")
app = Application(root)
#call the method
app.create_widgets()
root.mainloop()
This is a starting point and definitely works as proven below:

You can probablty muck around with the grid() instead of pack and call the method from the def init constructor. Hope it helps.
This calling method also works:
root = Tk()
root.title("Lazy Button 2")
root.geometry("500x500")
app = Application(root).create_widgets() #creates and invokes
root.mainloop()
My final try also works:
def __init__(self,master):
self.master = master
self.create_widgets()
followed by:
root = Tk()
root.title("Lazy Button 2")
root.geometry("500x500")
app = Application(root)
root.mainloop()

The final code:
from Tkinter import *
class Application(Frame):
"""A GUI application with three button"""
def __init__(self,master):
self.master = master
self.create_widgets()
def create_widgets(self):
#"""Create three buttons"""
#Create first buttom
btn1 = Button(self.master, text = "I do nothing")
btn1.pack()
#Create second button
btn2 = Button(self.master, text = "T do nothing as well")
btn2.pack()
#Create third button
btn3=Button(self.master, text = "I do nothing as well as well")
btn3.pack()
root = Tk()
root.title("Lazy Button 2")
root.geometry("500x500")
app = Application(root)
root.mainloop()
