In "Narrator Point of View," we noted that the narrator is not half as reliable as he pretends to be. What is clear, though, is that he is presenting the story of Billy Budd as a morality tale; he has a purpose for telling us this story. In this way, the story is an efficient little machine. We don't learn anything about anyone that goes too far afield of the role they are going to play in the central moral dilemma.
At times, the narrator admits that he doesn't know the exact details of the events he is telling us. Yet the flipside is that he wants us to know that he is smart. The story is peppered with philosophical and literary references, and it is clear that, if there is one character with whom the narrator most identifies, that character is Captain Vere, the learned seaman. The overall result of this attitude is that the narrator is saying, "Yeah, I may not have the facts just right, but you should listen to my take on them because I'm a pretty wise old guy and know a lot about morality and philosophy and history, even if I don't know that much about Billy Budd."
It's no accident that this novel has been taught as a case study in law schools. At the center of the story, the narrator places the questions: what happens when the law tells us to do something that, in every possible way, seems wrong? What happens when actions depict the exact opposite of people's intentions? For this reason, the novel might be seen to be didactic: intended to teach us. It's not necessarily that the narrator is telling us something, but he is clearly trying to force a lesson on us by carefully illustrating a moral dilemma and urging us to think about it.