Travis drives Ally to school because her book report project, a diorama about Tales of a Fourth Grade Nothing, the book Mr. Daniels asked her to read, is too big. Travis is surprised that Ally looks so happy to go to school on a Monday. At school, Shay asks how Ally made a kitchen scene with a working light. Oliver grabs for the light and knocks the wire, turning it off. Shay begins to yell at him, but Ally stops her and says she can fix it. Shay stands for a moment and then laughs that she read the book years ago, and points at a picture of a soldier in one of the rooms and says there are no soldiers in the book.
Given what the reader knows of Shay, she certainly isn't preparing to yell at Oliver on Ally's behalf—she likely sees Oliver's mistake as a prime excuse to torment her for her own gain. This is supported when Shay then turns to picking apart something else and trying to make Ally feel lesser for reading a book at a lower grade level, which suggests that Shay may feel more insecure than she lets on.
Max walks over to see what's going on, and Shay points out that Ally is making stuff up about the book she read. Ally explains that since most houses have art on the walls, she included a picture of Dad in his uniform. Max is excited to hear that Ally's dad drives a tank in the Army, fist bumps Ally, and then tells everyone about Ally's dad. Shay looks angry. Mr. Daniels tells Ally he's proud of her and Ally thinks that she's never heard that from a teacher before.
Max's interest in Ally's dad means that Shay's attempts to bully Ally backfire spectacularly, which in turn makes Shay look even less popular and cool to her peers. The fact that Ally has never been told by a teacher that they're proud of her reinforces how fortunate she is to finally have a teacher willing to work with her.