Theon Greyjoy travels aboard the Myraham to Pyke, his family home, which he has not seen in ten years. While aboard the ship, he makes use of the captain's daughter's, shall we say, VIP services, and then promptly dumps her when they make port.
On the island, he finds no honor guard waiting for him, just his old uncle Damphair Aeron Greyjoy.
Before they leave, Aeron baptizes Theon with seawater and a prayer to the Drowned God, who, as far as gods go, is a total bummer of a deity.
As the two ride to the castle, it becomes clear to Theon that not only has his uncle changed but also all of Pyke; he is a stranger in his own home.
Lord Balon Greyjoy calls Theon to his solar.
Theon presents a letter to Balon, but his father burns it. He says his crown is nothing he will be given, but something he will pay the iron price for.
(The iron price, by the by, simply means that they will kill someone and take his things rather than trade for them. Now, we're not economists, but we're guessing this bartering system presents some rather unstable long-term exchange rates. A bloody market bubble, if you will.)
Lord Balon says he aims to carve out a kingdom for the Greyjoys, and it just so happens one sits undefended and ready for the taking.
Theon wonders where he aims to take… but then knows.