Cookie Monster can't make up his mind.
I think this sketch gives us some insight into how Ernie is different from Bert. Bert would be a lot angrier and less patient in this scenario. I think he would either take all his apples out of Cookie Monster's reach or else hand him an apple and say, "HERE, Cookie Monster, just TAKE the apple. I INSIST!" Whereas Ernie is perfectly willing to let Cookie Monster make up his own mind, even if it takes all day and uses up his whole sheet of paper.
The thing I love about this sketch is that eventually they get going so fast that what they're saying no longer matches what they're doing. I'm guessing that was probably a mistake, but it just makes it funnier.