The governess and Mrs. Grose leave Miles behind to go find Flora outside. The governess decides to head to the lake, because it was there that she had last seen Miss Jessel. While walking to the spot where they had seen Miss Jessel, the governess talks to Mrs. Grose about what the children must say when they meet secretly to discuss Miss Jessel and Quint. She tells Mrs. Grose that the children likely say things that are horribly appalling, though she does not try to guess what that might be.
The governess here continues to tell Mrs. Grose that the children, when left alone, are likely engaging in some kind of serious misbehavior. She has a sense that their secret depravity is so great that she can't even guess at what it is. The governess has no evidence for this, though. Her certainty that the children act this way is itself a guess.
When they arrive at the spot, Flora is nowhere to be found. The governess then notices that the boat that is usually there has gone missing, and she assumes that Flora has taken the boat across the lake to meet Miss Jessel, and that she has furthermore hidden the boat. Mrs. Grose asks how she thinks a little girl could do such a thing, and the governess says that when the girl is alone she is no girl at all, but an “old, old woman.”
The governess’s characterization of Miles as a child with strangely adult characteristics has now been attributed to Flora, too. The shady boundary between innocent childhood and mature adulthood is here growing still shadier. If the children really are what the governess is suggesting, then what is she protecting them from? Aren't they already lost?
The two then go around the lake to see if they can find Flora. When they get to the other side of the lake, they see the boat, exactly as the governess had expected. After looking for a bit, they see Flora. Mrs. Grose excitedly rushes to Flora and hugs her, and during this embrace Flora gives looks at the governess over Mrs. Grose’s shoulder, staring at her with what the governess describes as a serious look. This seriousness is broken when Flora innocently asks why the two are not wearing hats. The governess replies by asking Flora where Miss Jessel is.
The difference between the governess’s relationship with the children, and Mrs. Grose’s relationship with the children, is highlighted here: Mrs. Grose receives a hug, and the governess receives a serious stare. Mrs. Grose’s interaction is with a more innocent Flora; the governess, on the other hand, perceives something more sinister underneath the innocence.