The stranger seems formal and acts suspicious.
Winnie is suspicious of the man in the yellow suit because he is dressed formally and acts formally. You would not expect either of these things from the average passer-by on the street. She is reminded of a funeral when she sees him because of how is dressed and how he behaves.
His tall body moved continuously; a foot tapped, a shoulder twitched. And it moved in angles, rather jerkily. But at the same time he had a kind of grace, like a well-handled marionette. Indeed, he seemed almost to hang suspended there in the twilight. (Ch. 4)
At first, the man has Winnie almost entranced. Then the man’s unusual behavior makes Winnie think of “the stiff black ribbons they had hung on the door” during her grandfather's funeral. She looks at the man more carefully. She asks if he wants to see...
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her father, and when her grandmother sees her talking to the man she is suspicious of him too.
The man on the other side of the fence bowed slightly. "Good evening, madam," he said. "How delightful to see you looking so fit."
"And why shouldn't I be fit?" she retorted, peering at him through the fading light. His yellow suit seemed to surprise her, and she squinted suspiciously. (Ch. 4)
Winnie’s grandmother is ready to run the man off until they hear music coming from the woods. She gets so excited that she forgets her suspicion, and the man in the yellow suit is interested to know that she has heard the music before. She says it is elves, but Winnie thinks that it is a music box.
The music box is important because it is Mae Tuck’s box, and it is a connection to her past. It is also, ironically, how the man in the yellow hat finds her. He wants desperately to find the Tucks so that he can make money off of the immortal spring.
Why is Winnie reminded of her grandfather's funeral when talking to the stranger?
But Winnie, though she was half charmed, was suddenly reminded of the stiff black ribbons they had hung on the door of the cottage for her grandfather's funeral.
Winnie meets the man in the yellow suit in chapter 4. The man is perfectly cordial and friendly to Winnie. In fact, he is even a bit charming, and those are Winnie's initial feelings about the man; however, Winnie does not fully trust the man. She feels as if something is "off" about the guy. The black ribbons and the funeral thoughts help the reader and Winnie better understand that the man in the yellow suit isn't what he seems. The black ribbons at a funeral might look nice and neat, but they represent a terribly sad situation. A loved one has died. Like the ribbons, the man in the yellow suit might appear and sound nice and neat, but he most definitely represents a dark, evil force in the novel. Winnie being reminded of her grandfather's funeral is her internal warning system going off about the stranger.