EMILY: Your head is much too big for a veil. You might consider a tiara.
LORELAI: Um, a tiara?
EMILY: That’s what I wore.
A callback to Emily believing that Lorelai had a head that was too big for her body when she was a child, with Lorelai’s first sentence supposedly being, “Big head want dolly”. Apparently Lorelai’s head is still “much too big” to wear a wedding veil.
Emily suggests a tiara instead, and says that’s what she wore as a bride, perhaps indicating that she also thinks of her own head as “too big”, and may be projecting that onto Lorelai. While neither Emily nor Lorelai have enormous heads, they both would look good in a tiara, so Emily’s taste may simply be correct.
Emily does not overtly indicate that she understood or forgave Lorelai after her apology, but answering her original question is a tacit admission that their fight is over. Emily is even worse at talking about her emotions than Lorelai is, but both women are trying to connect in their own ways. Lorelai smiles at her mother’s response, as if this tiny effort was the best she was hoping for.