"Billie Jean" plays out something like a dramatic monologue. A poetic device, the dramatic monologue is a monologue (a speech) given in a certain persona. The dramatic monologue assumes there is an addressee and an audience.
The idea of addressing the audience from an assumed role is a necessity of the dramatic monologue. As Robert Browning assumes the role of the Duke in "My Last Duchess," Jackson assumes the role of a star (not unlike... himself). Since Jackson's character in the song looks a lot like Jackson himself, you might ask why "Billie Jean" should be considered a dramatic monologue at all. The answer: the situation is totally fictional (according to Jackson), so his monologue is still more or less a characterization of himself in the situation.
Just like a dramatic monologue, the song has a clear audience. Jackson makes that clear when he warns, "So take my strong advice, just remember to always think twice." That audience, usually another fictional character in dramatic monologues, seems to be you (and us): Michael Jackson's listeners.
But why should you care? It might be just lovely that "Billie Jean" has some similarities to an age-old poetic device, but what do you get out of knowing that as a fan? Well, let's bring it back to the story of the song, and why Jackson would create a fictionalized account of his own experiences in the Jackson 5. Usually writers create stories to convey certain themes or general messages to the audience. "Billie Jean" is a cautionary tale of the dangers involved in "breaking young girls' hearts." The dramatic monologue, in which Jackson becomes the victim of this "beauty queen's" obsessive affection, allows Jackson to express his own personal feelings. Consider if the song were in third person. It would have a totally different feel. Just as how writers use science fiction or fantasy scenarios to express a theme that might be opaque in more realistic circumstances, Jackson could be using the story as a vehicle for personal expression of certain feelings that he had at the time of composition.
During the time that Jackson was working on Thriller, he felt extreme loneliness. "Even at home, I'm lonely," he said. "I sit in my room sometimes and cry. It's so hard to make friends." Additionally, Jackson was taking on a new kind of independence, firing his father as his manager when he turned 21 in 1981. "Billie Jean" seems to hint at the problems of this newfound independence - conveyed through a sense of naiveté. The verses leading up to the first chorus are markedly upbeat (disregarding the melody), with no foreseeable problems. Lyrically, the song begins like the ballads on Thriller, with the promise of love - "She was more like a beauty queen from a movie scene." But Jackson's jaded narrative shows cracks in his questioning. "What do you mean I am the one?" he asks, only to pay for his lack of understanding later. He harps on the phrase "I am the one" as if regretting not seeing the signs earlier. The pre-chorus finds Jackson expanding on this naiveté when he lists the wise warnings he chose to ignore, "be careful who you love," "be careful what you do." Later, Jackson is left repeating over and over his denials of Billie Jean's love because of his mistakes. Thematically, the song warns of the trouble you can find yourself in when you're out on your own. The dramatic monologue, the idea that Jackson can assume this role in this story, allows him to express what might be his own sense of frustration and naiveté as he emerged from the shadow of his youth to become an independent adult.