Revealing mistake: After the demon throws Buffy into a wall, she crashes to the ground. As she backs away, you can see the blue crash mat she landed on in the bottom left of the screen. (00:33:55)
Continuity mistake: Just before Buffy storms out on Spike, she puts on her denim jacket. When viewed from in front we can see the jacket is only half over her shoulders and her hair is loose. The shot cuts to view her from behind, and the jacket is now completely on and her hair is tucked under the collar.
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.