@Nancy88,
Tonight was the first time I have ever heard of the song so I'm just guessing as much as you are in terms of the lyrics meanings but by its simple lyrics:
1. boy meets girl (pug nosed dream) at a country dance;
2. Love at first sight ~
polka dots and moonbeams. Lovely and child-like innocent imagery that might imply silly giddiness had taken over the boy;
3. Not sure what the questioning look in the song meant. Maybe it's a hint at a possible class difference between the girl and the boy that the nearby individuals felt wasn't kosher. Or perhaps the term
polka dots and moonbeams plus the looks indicate that the boy was inflicted with puppy love which also might make more sense with the pug nosed dream reference and that the crowd of onlookers were skeptical this boy/girl coupling would last;
4. The song apparently flashes forward to some unknown future where the boy and girl are married (?) and living happily (in a cottage, built of lilacs and laughter) in a cottage and now the man understands that as a boy he took a wild chance at romance and that his initial meeting with the girl was puppy love but it worked out anyway.
PLEASE keep in mind that many pop songs aren't perfect and can consist of plot holes and many just don't make sense narrative wise so analyzing the lyrics to a cheesy and sentimental love song might be a red herring or utter nonsense in the first place.