People gathered on the street smiling and waving.
the people were outside
People gathered on the street means the people are outside.
exists e2 e3 e1 x1 x2.(n_street(x2) & for(e1,e3) & Actor(e3,x1) & v_wave(e3) & for(e1,e2) & Actor(e2,x1) & v_smile(e2) & on(e1,x2) & Actor(e1,x1) & v_gather(e1) & n_people(x1))
exists s1 x1.(n_people(x1) & Theme(s1,x1) & a_outside(s1))