Billy was confused by this nighttime incident, which made him uneasy. The next day, he saw the man from that night and was able to recognize him in the light of day as an after-guardsman. At the same time, though, he was uncertain whether it was really the same person, because the after-guardsmen appears genial and young, not like a conspirator. The man recognized Billy as well, and greeted him pleasantly one day. This surprised Billy, who didn't know how to respond.
Billy is unsure of whether the nice-looking after-guardsman is the same person who was possibly planning a mutiny, because he is inclined to see the man's appearance as indicative of his character. Billy doesn't know how to respond because the goings-on on the ship have become so murky—is the sailor just a nice guy, or is he still trying to win Billy over to mutiny?
Billy knew that he should report the after-guardsman, but also feared being a tattletale. One night he mentioned the event to the Dansker, but did not give all the details of the story. The Dansker saw the story as proof that "Jimmy Legs" was "down on" Billy. Billy was confused and asked what Claggart had to do with it.
Billy faces a conflict between his loyalty to the captain, which would dictate that he tell Vere about the possible mutiny, and his loyalty to his fellow shipmates, which makes him hesitant to be a tattletale. The Dansker, meanwhile, sees all of this as part of Claggart's hatred of Billy, suggesting that Claggart is behind the whole thing as an effort to entrap Billy. It's easy to take this as being true, but is it? We as readers have only the Dansker's unsubstantiated word to go on.
The Dansker, though, didn't say. The narrator says that the old man's experience at sea had taught him to stay out of such matters, as he had learned "that bitter prudence which never interferes in aught and never gives advice."
The Dansker has gained wisdom through experience. A figure from the honorable military past, he knows not to get involved in Billy's affairs. But there is an interesting tension here, as well—shouldn't camaraderie compel the Dansker to want to help Billy? But the Dansker's sense of camaraderie does not extend to giving advice, to personal loyalty. It is more of an impersonal camaraderie with the group of sailors.