Oni's eyes widened in shock when she realized the meaning behind Sarah's words. It's not that she is against going all the way with Michael, but they just kissed for the first time two days ago, and all this is too fast, and she needs to clarify. "Uhm… we do… I mean… We sleep together, but we only hold hands and kiss."
Sarah was surprised with this. They are sleeping together, and Michael is keeping it in his pants? Sarah smiled at the thought how Michael is doing that for Oni's sake. He must like her a lot, why else would a grown up man spend the night next to a woman he is interested in, and miss his chance to be intimate? With Oni's inexperience, she is probably like a clay in his hands, available (and probably eager) to be molded.