We still don’t know much about Billy or Tina, or how this all connects to Audrey. But it’s possibly meaningful that when Tina’s daughter is telling her story, she can’t recall whether her uncle was there that night or not. The deeper she goes into the anecdote, the less it sounds like she’s describing something that actually happened to her, and the more it sounds like she’s trying to recollect the details of a dream.
Lynch has already said he just wanted to have a scene that used the song Green Onions in its entirely, and that's the scene. There's no other meaning behind it. He just liked the song.
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