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Stiles isn't Jackson. He not even is what Lydia expects of a great love, but Stiles is good. And that's enough.
She loves Jackson, after all, he was the first love of her life, but Lydia isn't sure if he loves her back while is clear that Stiles is in love with her.
Maybe is because Stiles is so in love with Lydia that she goes to the dance with him. And maybe is because of him and only him that she smiles when Jackson tries to bring her down.
In that same night, while she's dancing with Stiles, Lydia realizes that he's not Jackson and he'll never be Jackson. But even though he's not exactly what she wants, he's good. Maybe she will never truly love him, but what they have with each other will still be good, 'cause she knows that he will always be the best second option.