What's this?"he demanded, looking from Clary to his companions, as if they might know what she was doing there."It's a girl,"Jace said,recovering his composure. "Surely you've seen girls before, Alec. Your sister Isabelle is one.

”

In the quote, the character Clary is in a room with the character Jace and Alec. Alec is demanding to know why Clary is there and Jace responds by pointing out that Clary is a girl and that Alec should know what girls look like because his sister Isabelle is a girl. Jace is saying this in a teasing way, implying that Alec is being ignorant by not recognizing that Clary is a girl.