Play within a Play
Symbolism, Imagery, Allegory
Wheels Within Wheels
A play within a play lets us watch characters watching something (besides each other, as is the case in Love Labour's Lost—everyone is making eyes at everyone else).
This device gives us clues to their character and/or advances the plot. Having spent most of his life in the theater, Shakespeare loved this device. He used it most famously in Hamlet, where Hamlet accuses his uncle of murder through a play put on by traveling actors. But we also see examples of the play within the play in A Midsummer Night's Dream.
Come on, Billy S: can't you branch out a bit? (We're joking; you're brilliant.)
In Love's Labour's Lost, Armado, Holofernes and the other rustics put on the Pageant of the Nine Worthies:
KING: Berowne, they will shame us; let them not approach.
BEROWNE: We are shame-proof, my lord, and 'tis some policy
To have one show worse than the King's and his company. (5.2.237-238)
This not only wraps up the motif of "Great Men" mentioned above, it provides another opportunity to contrast the behavior of the men and the women. While the men heckle and shame the rustics, even fanning the fire of Armado and Costard's potentially deadly rivalry, the Princess is kind and supportive. Perhaps her recognition of the King's display of immaturity is part of what prompts her postponement of their union at the end of the play.