need help

Into the street the Piper stept,
Smiling first a little smile,
As if he knew what magic slept
In his quiet pipe the while;
Then, like a musical adept,
To blow the pipe his lips he wrinkled,
And green and blue his sharp eyes twinkled
Like a candle flame where salt is sprinkled;
And ere three shrill notes the pipe uttered,
You heard as if an army muttered;
And the muttering grew to a grumbling;
And the grumbling grew to a mighty rumbling;
And out of the houses the rats came tumbling:
Great rats, small rats, lean rats, brawny rats,
Brown rats, black rats, grey rats, tawny rats,
Grave(meaning?) old plodders, gay young friskers, (meaning of gay here?)
Fathers, mothers, uncles, cousins,
Cocking tails and pricking whiskers, (pricking ?=)
Families by tens and dozens,
Brothers, sisters, husbands, wives --
Followed the Piper for their lives.
From street to street he piped, advancing,
And step for step, they followed, dancing, (Who followed here ? rats)
Until they came to the River Weser

1. I want to know the meaning of the word "stept".

2. I want to know the meaning of the sentence in bold letters.

3. Why does the poet use the word army in the line marked blue?