She stands all alone
The subject of the song stands by herself without anyone else.

You can hear her hum softly
Her humming can be faintly heard by those nearby.

From her fire escape in the sky
She is on a high fire escape above the ground.

She fills the bags 'neath her eyes
She has dark bags underneath her eyes, indicating she is tired or has been crying.

With the moonbeams
She uses the reflection of the moon to aid her in filling her bags.

And cries 'cause the world's passed her by
She cries because she feels left behind and forgotten in the world.

She's a haunted house
She is like a house that is haunted - with hidden emotions and sadness.

And her windows are broken
Her windows are shattered, much like the parts of herself.

And the sad young man's gone away
The lady is sad because the young man she loves has left.

Her bathrobe's torn
Her bathrobe is damaged, maybe due to neglect or lack of care.

And tears smudge her lipstick
Tears have smudged and stained the lipstick on her face.

And the neighbors just whisper all day
She hears her neighbors whisper about her from her apartment.

Didn't time sounds sweet yesterday?
The lady reflects on the past when things were simpler and less lonely.

In a world filled with friends
She is surrounded by people, but none of them are true friends.

You lose your way
In a world where people are your friends for their own gain, it is easy to lose your way and get lost in the emptiness.