They are lovers that probably have just had sex. They are on the bed, their clothes on the ground. The impression that they have just had sex is also created by the fact that the second person asks the singer if he fancies a cigarette, the archetypal post-coital cigarette. Moreover this was everything you could expect of a night according to the singer.
The relationship might even be a secret one, because the lovers are in a town where nobody knows them.