It's most likely from prey drive and the excitment your dog may be feeling. Most dogs instinctually have prey drive around smaller animals. I would suggest redirecting your dog at any attempt at this. To manage it, look for signs that your dog may start doing this and redirect prior to nudging. Having their own appropriate space and mental/physical stimulation each day will help decrease prey drive, but always supervise your cat and dog.

Why don't you think your dog doesn't listen? This is a very broad question so I'll answer in the same fashion. The main reasons dogs don't listen is because they haven't had their needs met or appropriate training to fulfill those requirements. Think about learning a new language. It takes daily repetition, over a period of time, and encouragement always helps. This is the same for your dog. Don't expect them to listen to you at a level 10 when all you taught them was a level 4.

Reading body language can be super easy. Look at your dog's limbs and overall body. Is it tense or loose? Are body movements light? How does the energy FEEL? If your dog is loose and light with positive energy, your dog is most likely playing. If your dog is tense and stiff with negative energy, your dog is most likely uncomfortable with another dog. Overall, dogs are just like us. Mimic their expression (emotional contagion) and make the appropriate decision based off that.