Clasping Nausicaa's knees seemed to risky for Odysseus, since Nausicaa might have reacted poorly to his touch. Instead he talks to her, admiring her beauty. Nausicaa senses that Odysseus means no harm, so she decides to help him out. (Odysseues later tells the story of his journey to King Alcinous and Queen Arete---Nausicaa's parents who help him get back home to Ithaca.) Hope I helped!
The word <em>that </em>is used as a relative pronoun here, it can be interchanged with the pronoun <em>which, </em>and both are used to connect two parts of a sentence.
