Something must have happened because Lynne was previously seen power walking with two other women, and now she is power walking alone. Maybe she was fed up with all the gossiping which led to less walking, or maybe George's comments really hit home. Anyway, she's out on her own.
Why is Lynne thinking about Larry? She must be walking near his house and thought 'Larry lives round here.' Initially it seemed like a remarkable coincidence that Lynne would randomly be thinking about Larry and then he comes past, but if she is walking near his house then it would seem feasible that she would see him. You would expect that Lynne, having just thought about Larry, would then say having just seen him, 'Wow! What a coincidence! I was just thinking about Larry, a friend who I haven't seen for a while, and there is with his dogs,' rather than make a quip. Maybe the opportunity was too good to pass up considering she just thought about Larry using the word leads and then he comes by with his dogs. How often does that happen?
Who is Lynne talking to? She thought the first comment and then decided to say her quip out loud, thus making the quip redundant. Any passer-by, of which there are none, wouldn't have heard Lynne's initial thought and therefore would assume that the woman was quite mad. And poor old Larry, sweating inside his three piece tweed suit. Lynne decides to make a comment whilst Larry is clearly distressed. His dog walker must be on holiday because he must be used to walking all four of his dogs. Lynne, help the man!