The above excerpt relates to Tom Buchanan, who's completely gobsmacked by the loving look that his wife, Daisy, has just flashed at Gatsby. Daisy didn't come right out and tell Gatsby that she loved him; certainly not in front of her husband. Instead, she simply looked at him longingly for a short while before telling him how cool he was.
Yet Tom immediately picks up on Daisy's body language; he knows that she's effectively just made a declaration of love, in her own unique way. This is how the upper classes, the old money elite of East Egg, behave. By virtue of their upbringing, they're able to convey deep emotions and feelings with simple gestures, without actually needing to say anything. And by the same token, they also know how to read those gestures in others.
That's what Tom's doing here; he instantly picks up on how Daisy looks at Gatsby and arrives at the conclusion that she's in love with him. Other people in his situation, without the benefit of Tom's elite upbringing, may not have been able to detect this. But Tom knows just what's going on, and he realizes that Gatsby is now a potentially serious threat to his marriage.