First things first, this is the same party that Lynne went to on her own from before. The host was Ken, who invited Lynne so he could look at her boobs. Lynne was wearing a necklace, and now she isn't. George couldn't make it because he was working late and he got back too late to go to the party so has decided to put on an old t-shirt and watch TV. He knew Lynne had gone to the party so naturally asks her how it was, to see if he missed anything. It seems he missed quite a lot.
Lynne was in a flirty mood by turning up to that party on her own and, as we have also learned, she had been drinking before she arrived. The necklace broke because she asked every man to have a look at it; a close look. Somebody slipped and pulled the necklace off but it was a cheap one from Argos and was bound to break sooner or later. To be honest, the pearls couldn't have really gone down her cleavage when you look at that dress. There's nowhere for them to go. They must have fallen down her dress which means it was the naval area that they were stuck in.
The scene culminates in 5 dribbling middle-aged men fishing out mock pearls from a drunk woman's dress. The wives of those men would have looked on horrified. It now makes sense that the women here are in fact the wives of those men. All in all, it was a good party for Ken. Lynne came alone, wore a revealing a dress and he got closer to her chest than he could've possibly imagined.