Simply put, just as Elly never really seems to understand what's really happening around her or what's going on in the lives of the people she knows, she is usually way off base as to what people are actually thinking. As by way of example, let's look at this rather depressing blast from the past. As we see here, the poor fool's need to be reassured that Elly actually likes having him around runs right into her need to be angry that he won't give her time to herself. Given that her reaction is one of existential horror, what clearly seems to be happening is that she goes from thinking"Rassen-frassen KID doesn't want to give me time to myself!! MARGO BOXCAR SATURN!!" to "Rassen-frassen KID wants to make me feel guilty about wanting time to myself!!" At no point is the idea that Michael isn't trying to destroy her and chain her to a stove because he's evil and loves CHAOS!!!! considered because she simply can't imagine why an insecure child would want attention unless it's a way to make her own life worse and deprive her of any independent identity.
That being said, it isn't just her need to make villains out of people that keeps her from understanding what other people are really after. The same woman who can make a big, ugly fool of herself looking down Evil Career Woman's nose because she thinks that her choice to do something practical with her baby shower means that she wants to turn THAT CHILD into merchandise or some such nonsense trusts a lot of people that she shouldn't because she has no idea what they're thinking. To this day, she still can't quite make herself understand that Kortney is a lying thief who only pretended to respect her, can't see what an awful human being Greg Thomas is and has no idea what a disgusting pile of crap the Nice Guy™ she maneuvered Lizzie into marrying is. A smarter, more aware person would be able to tell shit from Shinola but that's more than Elly can do. Since she tends to assume that what she thinks they're thinking is what people are actually thinking, she condemns the relatively innocent while fawning over the repulsive in smug self-righteousness.