Worried about the interest Ava showed in Luke at the fashion show, Lorelai tells Luke the next day that she’d prefer he didn’t date Ava, because it would interfere with their friendship, and any possible relationship she might have with Ava via the Booster Club. It’s an almost exact swap for the time Luke advised Lorelai not to date Ian Jack, the Chilton dad she met on the first day she took Rory to school, both taking place over the diner counter. (Ava and Ian even have the same number of letters!).
Luke, quite rightly, tells Lorelai to butt out, because he can date whoever he likes. He then explains that he wasn’t arranging a date with Ava anyway, just giving her directions back to Hartford.
Although both wind up indignant at the other, they must also feel relieved. Lorelai that Luke wasn’t interested in Ava after all, and Luke having been given confirmation that Lorelai does have some feelings for him.