This is an interesting chapter because not a lot happens in the way of action but we learn a ton more personal information about Holly.
After the night in the narrator's bedroom, Holly stops ringing his apartment when she loses her key, and he realizes that he misses her. He starts to feel lonely, but he doesn't want to see his old friends since they seem plain and boring now; he calls them a "salt-free, sugarless diet" (4.1). The narrator gets so distracted by thoughts of Holly that he's no longer able to write, so he eventually sends her a message to remind her to visit Sally in prison the next day. Holly thanks him by inviting him to her apartment for a drink.
When the narrator arrives, he's greeted by a man who he describes in detail as a "creature" (4.3). "His bald freckled head was dwarf-big: attached to it were a pair of pointed, truly elfin ears. He had Pekingese eyes, unpitying and slightly bulged. Tufts of hair sprouted from his ears, from his nose; his jowls were gray with afternoon beard, and his handshake almost furry" (4.3). The guy sounds like a mix between an elf and a dog, doesn't he?
This is the first time the narrator has seen the inside of Holly's apartment, and it looks like she's just moved in. Nothing is unpacked, there really isn't any furniture, and it has the "fly-by-night look" (4.4) we might expect of Holly.
Holly's still in the shower, so the narrator and the elf-dog start chatting, and this is when we learn a lot about Holly's past. Apparently, Holly believes in a lot of what the elf-dog thinks is "crap" (4.16) (though we never get a clear explanation of what that stuff is). At one time a man named Benny Polan, who is "respected everywhere" (4.16), wanted to marry her, and he sent her to countless "head-shrinkers" (4.16) to rid her of her "ideas" (4.16). It seems even Freud couldn't cure Holly. The elf-dog finds all of this incredibly frustrating and he finally declares that one day Holly is going to wind up addicted to pills.
As the conversation continues, we hear of additional "opportunities" that Holly has passed up. We find out that the elf-dog is actually an important Hollywood agent named O.J. Berman. Apparently, at some point he had secured a role in a big movie for Holly after discovering her at the race track.
When Berman first sees Holly, she has been going to the horse races every day because she's living with one of the jockeys. Holly is fifteen years old at the time, so Berman threatens to turn the jockey in to the police unless he breaks things off with her, which the guy then does. Berman takes Holly under his wing and starts to groom her for work as an actress, and eventually gets her an audition for a Cecil B. DeMille film (he was a very famous director at the time).
The day before the audition, Berman gets a call from Holly and it seems she has left for New York. He demands that she "get [her] ass on a plane and get back [to Los Angeles]" (4.20), but Holly refuses to return. She tells Berman that she just doesn't want to be famous, and that she doesn't want to be a movie star. When he asks her what she does want, she tells him she doesn't know but that he'll "be the first to know" (4.20) when she figures it out. And that puts an end to Holly's Hollywood career.
We then hear about Rusty Trawler for the first time (another man who wants to marry Holly), but before we get the whole story Holly comes into the living room wearing just a towel and still dripping wet from the shower. She tells Berman that Fred (the narrator) is a "genius" (4.36) writer and that the agent should help "make [him] rich" (4.36). Nothing really comes of this conversation, though, since the rest of the guests (all men at this point) start to show up.
Several military officers and older men arrive in the next few minutes, and each one is clearly upset that he's not the only one there (they all seem to want Holly to themselves). But the men start hanging out and enjoying each other's company, and this is when the narrator notices one man in particular – Rusty Trawler.
The narrator describes Rusty as a man in a child's body. He looks like he's never aged and something about his face reminds the narrator of a little kid on the verge of a temper tantrum. But Rusty is actually a happy host and he spends the evening serving drinks, choosing the music, and introducing the guests to each other. He doesn't even seem to mind when Holly flirts with other men, even though he's supposedly in love with her (but more about this later).
We then get to hear Rusty's story, and it is a doozy. Both of his parents died when he was five, and they left him millions of dollars. He also became a bit of a tabloid celebrity. As a young boy, Rusty "had caused his godfather-custodian to be arrested on charges of sodomy" (4.41), and his series of marriages and divorces became the stuff of tabloid stories. He has been married and divorced four times so far, and it was rumored that he asked Unity Mitford to marry him too (she was a real-life friend of Hitler's and supported the fascist movement). It seems Rusty has some fascist tendencies himself since he also attends what we can assume are fascist rallies. And this is what we learn of the man who now wants to marry Holly.
Holly eventually takes some time out of flirting with her guests to come talk to the narrator, and she really encourages him to pursue things with Berman since he can help the narrator's career as a writer (it seems that Holly has developed true affection for the man who reminds her of her brother).
He asks her about the part in the DeMille movie, and Holly tells him that she "knew damn well [she'd] never be a movie star" (4.51). It's more important to her to be herself and to "have [her] ego tagging along" (4.51) when she does become rich and famous, which she fully intends to do at some point in her life (got to love her self-confidence!) And it's in this conversation that we first hear of Tiffany's when Holly declares, "I want to still be me when I wake up one fine morning and have breakfast at Tiffany's" (4.51).
The conversation shifts very briefly to Holly's cat, who she refuses to name since she doesn't "have any right to give him one" (4.52). Holly doesn't consider the cat as belonging to her and says she doesn't "want to own anything until [she] know[s] [she's] found the place where [she] and things belong together" (4.52). Although this seems like an insignificant detail, this cat without a name, it tells us a lot about Holly and her aversion to being tied down by anything or anyone.
Talk shifts back to Tiffany's, and we learn why Holly likes the upscale jewelry store so much. It's not the expensive things in it but rather that the store makes Holly feel better when she's got what she calls the "mean reds" (4.55). When she's feeling afraid and is sure that "something bad is going to happen" (5.54), she goes to Tiffany's and the place makes her feel better.
She mentions her brother Fred again, and it's pretty clear that she imagines this real-life place as one for her and her brother. All Holly wants, it seems, is a place to feel safe, and she hasn't found that spot yet.
At this point, Rusty comes up and interrupts the conversation. He acts like a child with Holly and teases her about not loving him. She responds to him as if she were his "governess" (4.62), reminding him of his "chores" (4.66) and chiding him about his diet. He seems satisfied by this and returns to the party, and then Holly tells the narrator that Rusty is gay. He won't admit it, but perhaps this is why he doesn't seem too bothered that she flirts with other men in front of him.
An interesting shift in action occurs at this point when Mag Wildwood enters (she's a model who poses for Yunioshi), and it's clear that Holly doesn't like this woman one bit. Mag pushes her way through the crowd of men and latches on to Berman, but all of the other men want her attention as well. She's not particularly beautiful, but she's really tall and seems to have embraced her "defects" (4.89) by drawing attention to them, which intrigues people. She wears high heels even though she towers over everyone else, she dresses in tight-fitting clothes that accentuate her boyish figure, and she wears her hair in such a way that "accentuat[es] the spareness, the starvation of her fashion-model face" (4.89). She also stutters, but even this behavior seems exaggerated. The effect of all of this is that the men in Holly's apartment are immediately drawn to Mag, which just seems to bug Holly to no end.
When Mag excuses herself and goes to the restroom, Holly takes this opportunity to crush the model when she tells her guests the following: "'It's really very sad.' She paused long enough to calculate the number of inquiring expressions; it was sufficient. 'And so mysterious. You'd think it would show more. But heaven knows she looks healthy. So, well, clean. That's the extraordinary part. Wouldn't you […] wouldn't you say she looked clean?'" (4.90). Holly never specifies what exactly she's referring to here, but we can guess that she's implying that Mag has a sexually-transmitted disease (hence the suggestion that she's unclean).
This revelation has the desired effect and when Mag returns to the party there is a noticeable shift. The men are cold and no longer interested in her, and "more unforgivably, people were leaving without taking her telephone number" (4.93). Since she's already drunk, Mag reacts belligerently. She calls Holly a "Hollywood degenerate" (4.93), then tells Berman (who we can assume is Jewish) that "Hitler was right" (4.93), and she physically threatens Rusty. She eventually falls to the floor and won't get up, so Holly asks the narrator to get Mag a taxi and send her home. Holly and the rest of the men leave, and Mag tries to get up, but she passes out and the narrator leaves her there to sleep it off.