Continuity mistake: When Buffy wakes up she is wearing metallic nail polish, yet when she went to sleep previously, she has no nail polish on. Later in a scene where Buffy is dreaming about her night with Angel she has the nail polish on again, even though that took place the night before when she did not have her nails painted. (00:01:15)
Continuity mistake: In Innocence, when the Scoobies are in the library, Oz (I think) says for the crew to meet outside Xander's house a half hour later. Then we cut to Buffy strolling through Sunnydale High in broad daylight, then back to Oz's van outside the military base and it's last night again. (00:23:15 - 00:29:20)
Continuity mistake: The book that Cordelia replaced sideways in the bookshelf behind her disappears, and then reappears just before she and Xander kiss.
Continuity mistake: When Willow catches Xander and Cordelia kissing in the library, the hair next to Willow's right ear moves between shots as her and Xander are talking in the hallway.
Continuity mistake: When the Judge is blown up, Drusilla and Angel leap from the balcony. In mid-air, they somersault and their backs are facing the ground as they fall, but a second later they land on their stomachs.
Continuity mistake: When Buffy is told that Angel has become Angelus, she mentions "I should have known. When I saw him at the house he was different", but her earlier conversation with him took place not at the house but at his apartment. This isn't just a strange turn of phrase - the scene was originally shot at the Summers house, but was changed to Angel's apartment for more emotional resonance.
Chosen answer: Angel is saying that he is still jealous and Buffy recognizes that this is his way of saying he wishes that they could be together. That is why they both smile.