Strange doesn't understand the specifics of why Ignatius is staring at him like that. What he does understand is that he's got a feeling Ignatius likes this form that Strange is in so hot damn, he is going to stay tiny and fire for as long as his magic lets him (or until Childermass and the rest return.)

The clothing question doesn't bother Strange as he awkwardly floats over so that his tiny little fire form is resting on Ignatius's leg. It's like somebody put a golf ball on a human's leg, there's plenty of space here for him to hang out and not make it super weird.

"I'll reform inside the clothes," Strange points out. "I've done it before with smoke, I know it'll work."