It is about the singer's great admiration of fellow schoolboy David Watts, who appears to have a "charmed life." There is an undercurrent of either deep envy or, as AllMusic put it, "a schoolboy crush." It is also, as Jon Savage has written, one of Ray Davies' "sharpest homoerotic songs". As Ray Davies has confirmed in The Kinks: The Official Biography by Savage, "David Watts is a real person. He was a concert promoter in Rutland". Ray goes on to relate how the real Watts was gay and demonstrated an obvious romantic interest in brother Dave. In this light, lines like "he is so gay and fancy free"; and "all the girls in the neighbourhood try to go out with David Watts....but can't succeed.." provide a second level of interpretation based on this ironic in-joke.
The song was later covered by The Jam, who released it on 26 August 1978 as the first single from their third studio album, All Mod Cons. The Jam version, which reached No. 25 in the UK Singles Chart, featured bassist Bruce Foxton on vocals rather than Paul Weller, as it was not in the right key for the Jam frontman. It was backed by "'A' Bomb in Wardour Street", also from All Mod Cons.