Elena was offended by Damon's words, along with being embarrassed and angry. Her hand came up and she smacked Damon with everything she had in her tiny body knowing it probably wouldn't hurt that much to the vampire.
"First off I haven't been given any panties to put on," Elena said getting up from the chair to move away from Damon. She had enough of the vampire and his words. "Second it is not a human thing to be embarrassed about. It is about being modest and respectful. Also not something you discuss with a person you hate and don't trust."