Lynne and 'Mantha are applying their make-up. Lynne tells 'Mantha that a man called at her house the other day and caught her naked. 'Mantha says that that is a bit embarrassing but adds that after all, Lynne has a great figure. Lynne says that she meant naked as in with no make-up on. 'Mantha says wow.
Halfway through an evening, Lynne and 'Mantha decide they need to reapply their make-up as this is the mirror of a ladies lavatory somewhere. Make-up is supposed to stay on the entire night, with the exception of lipstick which is usually re-applied, so either the make-up they used is extremely shoddy or someone has been manhandling their faces throughout the evening.
They might be in some seedy club. George knows the owner and has reserved a back booth. There, under cover of low lighting, Sammy and George have been allowed to ravage their wives, and perhaps each other's wives, without fear of embarrassment of being spotted by the locals.
'Mantha is now so bored of Lynne's set-up and deliver schtick that she has taken to sarcasm to get through them. Here she is pretending to be absolutely shocked by Lynne's story when in fact she is shocked that her jokes couldn't get any worse. You wonder why she puts up with it and still hangs out with Lynne. Two words: back booth.