Kagami has never been someone who considers himself attractive or desirable, to be fair to Kise who's hitting his head against the wall here. Growing up in America, most girls didn't gravitate towards the awkward Japanese kid (with the exception of Himuro, who has always been naturally charming in a way Kagami can't muster). On top of that, people think he's scary and gruff even when he doesn't mean to be because of his resting face, so he's internalized that somewhat. People never came to him for advice about crushes either, so he's barely even discussed anything related to this topic with anyone.
Why does it sound like Kise is teasing him? "We were talking about cooking!" Excuse him for trying to make a connection to the conversation they were having! "I know people do... other things with girlfriends! ...And boyfriends." Speaking of those other things, he suspects that his good friend Kuroko might be engaging in them with a certain other Generation of Miracles member who's not here right now. Anyway.
What the hell does Kise mean, he wouldn't mind? That's such a lukewarm statement! It's the kind of thing you say to someone when accepting a favor. Oh, yeah, sure, I'll run to the store for you. I wouldn't mind. Not when they're talking about kissing! "Can't you just be direct?" he mutters. "Do you want to or not?" Kagami communicates like a dunk: direct, easy to understand. And Kise is... alley-ooping him? Maybe the basketball metaphor wasn't such a great one after all.
Wait... I just asked if he wanted to... kiss me? Kagami squints at Kise, trying to put the pieces of this conversation together. Kise is talking about Kagami's appealing qualities, asking him if he wants a boyfriend, then teasing him about kissing. A red flush is now creeping up his neck to his ears, and he shoves another handful of fries into his mouth. "Yff flffnnf mmff."
Really good, really articulate response. Okay, he should probably not talk with food in his mouth.
Kagami swallows. Tries again. "You're... flirting with me." He may be stupid, but he's not that stupid. The question is: why? Truly, why? What does Kise see in him? Kise is probably used to people falling head-over-heels for him because he's pretty and charming — at least, that's how he gives off his public persona. In private, he's probably a bit more awkward than that, but aren't they all? They're all just teenagers.
Would he mind kissing Kise...? Kagami tries to imagine it, and it's unfortunately way too easy. Kise's easy to be around, shares his interests, and is objectively... really hot. He's a bit irritated that Kise keeps speaking to him in riddles rather than approaching him directly, but mostly because he's embarrassed with himself for not picking up on it sooner. Genuinely, he's not trying to be dense. "If you're seriously not makin' fun of me... then yeah. I would." Cool! Great! He's now admitted to that! Embarrassed, Kagami takes a too-large gulp of his drink and almost chokes. Sure would be mortifying if Kise wasn't serious and he's misinterpreted the situation again!