Despite the cold, Mrs Beaten lies with her arms outside the covers, pressing her hands against the side of her body in the hopes that they will not go numb. She understands that it is important to keep the arms, and therefore the hands, outside the covers.
People who put their hands inside the covers may end up fiddling about with their own bodies.
Mrs Beaten is not quite sure what the fiddling about would involve. She has a feeling that the body at night, the body under the blankets, is not the same as the body by day. Something happens down there. Something it would be better not to fiddle about with.
As she tries to distract herself from the cold, she wonders who else on Hopeless Maine has the decency to sleep in this way. So many of the islanders seem indecent that she supposes most do not. She imagines the decadent snuggling of limbs beneath covers. The lustful indulgence of putting personal ease ahead of morality.
She supposes other islanders fiddle about in the night with the unspeakable things that go on with their own bodies. She supposes that it is terrible, and the terribleness holds a fascination for her that she cannot help but revisit, over and over again.