This passage is from Virginia Woolf's Mrs Dalloway, which describes the events of a single day in 1923 through the actions and thoughts of numerous characters. The narrator shifts from observer to omniscient observer to characters' interior monologue, often within the same passage, as in the one you quoted. Notice that we're told that the crowd gathers, which is just descriptive, but we're also told what they admire, so we know what they're thinking. This kind of story told through stream of consciousness is more difficult to follow than straight narration, and it strains the rules of punctuation.
If you read further into the paragraph, you'll find that the crowd of poor people gathered, waited, looked at, admired, singled out, bestowed, and let. The paragraph ends however, not with what the crowd is doing or thinking but with the actions of the royal family about whom the crowd is considering.
It might help to know that "Victoria, billowing on her mound" is the Queen Victoria Memorial, across from Buckingham Palace.