Continuity mistake: While Buffy is in the hospital, they zoom in on the bedside clock changing from 2:26 to 2:27. In the next shot of Buffy, you can see the clock in the background and it reads 12:15.
Continuity mistake: When Buffy looks into the childrens' ward the sign on the door saying 'Basement Access' disappears and reappears between shots. (00:12:00 - 00:36:15)
Other mistake: In the basement when Death throws Ryan to the floor, Ryan lands pretty softly considering that he was just thrown pretty hard.
Continuity mistake: After drinking the water with the virus, Buffy looks into a room and her hair is damp and brushed back. In the next shot, it's dry and parted down the middle.
Other mistake: Buffy freaks out when she's first taken to the hospital. Joyce tells the gang it was because her cousin died when they were young, but in season one episode "Angel" Buffy has no problem being in the hospital, same with later seasons.
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.