The speaker is caught in a painful triangle. There is a third person, "she," who sits between the speaker and the one being addressed, and her presence makes the two of them feel like strangers. The speaker watches her touch the other person's skin and stroke their hair, and sees how easily those gestures seem to claim him or her. Even the way the loved one smiles while talking about her shows where their attention has gone.
The most heartbreaking moment comes when she says the loved one deserves someone better than her. The speaker passes this on, hoping for something, and instead gets a happy smile. That reaction says more than any words could.
The poem is built on repeated "When..." lines, which pile up like small wounds before the final admission: "Because I loved you first." The mood is quiet, raw jealousy mixed with sadness, and the plain wording makes the hurt feel honest and unguarded.