The poem begins with a rather strange, even surreal image. The speaker says,
A smile fell in the grass.
The "smile" here is metaphorical; a smile can't actually "f[a]ll in the grass." Smiles, of course, are signs of happiness and pleasure. The fact that this smile is "[i]rretrievable" thus implies that some happiness or pleasure has been lost for good.
It's not clear whose smile, whose happiness, this is. The speaker might be talking about their child's joy, their own, or both. But readers don't know, in these opening lines, that the poem is being told from the perspective of a parent. As such, this opening metaphor seems to speak to the idea that all happiness, all joy, will eventually be lost.
Note the ambiguity of the poem's title as well. "The Night Dances" could be read two ways: either the "Night" itself is dancing, or somebody's "Dances" happen at "Night." This uncertainty reflects the tension at the heart of the poem, as the speaker grapples with two different perspectives: the cosmic and the human.
The poem establishes its form right away: it's composed entirely of couplets. These two-line stanzas hint at the intimacy between parent and child and also at the conflict that is central to the poem: the significance (or lack thereof) of small, human moments (those little couplets) against the backdrop of an infinite universe (the poem as a whole).