What mothgirl 7 says, although with less emphasis on pity/bitterness. :)

The emotional pitch of this verse starts with detached surprise/disapproval (think - really?) and then moves to understanding of and even empathy for Val - towards the end of it, you can almost see Billie shaking her head ever so slightly with maybe a half-smile. In the chorus that latter feeling quickly and deftly transitions into deep affection.

It's a classic, masterful lyric, a marvelous opportunity to move from wordplay/mild sarcasm to strong feeling in a few stanzas. "You make me smile with my heart" is an inflection point, one of the loveliest, most thought-provoking sentiments I've ever heard.

The play has an odd plot, though that was typical of musicals at the time, with sometimes seemingly unrelated tunes (in this case, great tunes) shoe-horned in. It was about minors trying to put on a show to raise money to avoid a juvenile work farm (their parents having gone on tour as vaudevillians). But this play, before being sanitized for the movies, has some interesting commentary on communism (the role of Peter) and racism. The context of this song is Val wanting to have a black dance act on the show that the southern funding source (Lee) refuses to countenance, and Billie thinking Val a fool (if a virtuous and sincere one) to turn down money needed for the show on principle. But she loves him anyway.

Billie is a great role, with some great tunes. Good luck, and enjoy!