Like all effective dream scenes, it seems this one has been a premonition.
Things are a little different at Kinograph Studios now. They've stopped "all silent productions to work exclusively on talkies."
("Talkies" is the fun word 1920s folk came up with for films with talking and sound in them.)
George meets with Zimmer, who informs him that "the world wants new faces, talking faces," and George isn't one of those faces.
"The public wants fresh meat," he says, and "the public is never wrong." Makes you wonder why George won't talk…
George says he'll make his own movie without the help of Zimmer. On the way out he sees a poster labelled "The New Faces of Kinograph." Among those "new faces," who other than Peppy Miller.
George descends the stairs as a bunch of young people run up them. He bumps into Peppy, and she tells him she just signed with Kinograph. He pretends to be surprised. She gives him her number and tells him to call her.
As he turns to leave, she whistles to get George's attention, does a version of the Charleston from the landing, and blows him a kiss.