Panel 1: We find ourselves watching Elly and Michael marvel at Elizabeth's birdhouse. As they do so, Liz tells them that Dad said it would look a lot better when it's varnished. He smiles at her because he doesn't know what his birdhouse (obscured by his elbow) or his need to slam her work to her face to 'help her improve' means to her.
Summary: What we find out that it means to her is that she feels shame that she cannot be as good as he is. John cannot understand this because it means that he has to do something he's always hated to do because he confuses it with being muzzled: shut his fat yap and think about what he's saying and how other people will react to it.