I also thought this paragraph was funny, but if you dissect it, all of the confusion and agitation is due to Frank and Emma's chaos games. Chapter 41 is the key to the mystery, as gianni has pointed out in his post "Hints: ...".

Chapter 49: He found her agitated and low. Frank Churchill was a villain. Mr. Knightley thought that Emma was low because she had been in love with Frank and now it was revealed that he had been engaged to Jane. Emma's real reason was that she thought Harriet had captured Mr. Knightley's heart- a crazy idea that she never reveals to him.

Chapter 41: But while so many were devoting him (Frank) to Emma, and Emma herself making him over to Harriet, Mr. Knightley began to suspect him of some inclination to trifle with Jane Fairfax. Mr. Knightley was ready to believe that Frank and Jane had a secret mutual admiration but Emma squashed the idea.

"... they are as far from any attachment or admiration for one another, as any two beings in the world can be. That is, I presume it to be so on her side, and I can answer for its being so on his. I will answer for the gentleman's indifference."

She spoke with a confidence which staggered, with a satisfaction which silenced, Mr. Knightley. ... he soon afterwards took a hasty leave, and walked home to the coolness and solitude of Donwell Abbey.

Emma was so confident because she thought that, when Frank rescued Harriet from the gypsies in Chapter 39, they would fall in love.

Mr. Knightley's jealousy of Frank was removed by Emma's revelation: He heard her declare that she had never loved him. ... She was his own Emma, by hand and word, .... Perhaps Frank is not so bad after all.