"Upon Julia's Clothes" is a very liquidy poem. It uses all kinds of watery words to describe… clothing. Obviously, Julia's clothes aren't really liquid—how would that work? But it's not super difficult to imagine billowy silks and flowing clothing as looking like some kind of liquid.
Line 1: Clothes don't really flow. That verb usually applies to rivers and streams. But we might think of it as a metaphor for the way Julia's silks fall to the ground in a beautiful way.
Lines 2-3: Julia's clothes aren't literally liquefying, so let's call "liquefaction" a metaphor for the way in which they appear to become more fluid and "free" (5).