I get the feeling that he used to be close lovers with this person, and this is the first time he's seeing her as 'just friends.' And that bothers him and he wants to just grab her and make things the way they used to be, but he doesn't because he realizes that he can't and that it's odd but that he has to make do with what he now has, as "But I'd rather be your friend / Then to never see you again"
I get the feeling that he used to be close lovers with this person, and this is the first time he's seeing her as 'just friends.' And that bothers him and he wants to just grab her and make things the way they used to be, but he doesn't because he realizes that he can't and that it's odd but that he has to make do with what he now has, as "But I'd rather be your friend / Then to never see you again"