She isn't a ghost but her love is and so is his because they've not yet revealed it to each other. "The words" she refers to are "I love you". She is alive but she isn't there with him. He is thinking about her. He wants to tell her he likes her but is nervous and afraid to approach her. When she says "letting go" she means let's let our love go and love each other openly and freely without holding back and no reservations.
Then in the end he sees her in the flower store and finally approaches her and they officially meet.