I would like to turn into a misty rain on earth, stay with you and watch you live the rest of your life quietly.

She is willing to accompany you in illusory forms such as "smoke", "rain" and "air", instead of getting along with you in the form of concrete, real and living people. Even so, she wishes you "peaceful years and carefree rest of your life". Friend, with all due respect, she implicitly refused you to want to have further or deeper contact with her (such as affection or love, if you have confessed to her, she is politely refusing you), and clearly told you that she can only exist by your side like a very ordinary friend and can't have any development with you.