Read the full text of Henry IV Part 1 Act 2 Scene 4 with a side-by-side translation HERE.
At a tavern in Eastcheap, Prince Hal brags to Poins that he's buddy-buddy with a bunch of drawers (like waiters) – they're on a first-name basis and say they can't wait for him to be king.
Hal can drink with any tradesman too because he's gotten to know their lingo. Chugging wine, for example, is called "dyeing scarlet."
To kill time before Falstaff arrives, Hal plays a trick on Francis the drawer, chatting him up while Poins calls to the poor guy from another room. Hal has a good laugh at the expense of Francis, who doesn't know which way to go.
Hal talks trash about Hotspur and does a mean but funny impersonation, which pretty much nails Hotspur's penchant for war and hyper-masculinity. It goes something like this: "Grrr. I'm Hotspur and I eat warriors for breakfast, etc., etc."
Falstaff and the fellas (Gadshill, Bardolph, and Peto) enter. Falstaff demands a drink and calls Hal and Poins a couple of "cowards" for skipping out and leaving Falstaff and the others in the lurch at Gads Hill. (He doesn't know that Hal and Poins were the masked robbers.)
Falstaff says he and his crew were robbed by 100 thieves after they themselves robbed the king's exchequer. As Falstaff continues with the story, the number of robbers keeps increasing as Hal eggs him on.
Finally, Hal calls Falstaff a fat liar and Falstaff gets upset and calls the prince a bunch of names until he runs out of breath. Said names include "neat's tongue" (dried ox-tongue) and "bull's pizzle" (dried bull's penis). This firmly establishes Falstaff as the world heavy weight champion of smack-talk.
Finally, Hal reveals the truth – it was the prince and Poins who ganked Falstaff's crew.
Falstaff ingeniously recovers from this revelation – he claims to have been a "coward on instinct" – meaning, he instinctually knew to behave like a coward instead of killing the future king.
That settled, Falstaff and Hal decide to put on a skit.
Just then, the Hostess, Mistress Quickly, enters with news that a messenger's at the tavern door and wants to speak with Prince Hal on behalf of the king. Not to worry. Falstaff says he'll talk to the guy and "send him packing."
History snack: Shakespeare coined the phrase "send him packing," which appears in print for the first time in this play.
While Falstaff deals with King Henry's messenger, Hal jokes with the fellas and gets Peto to admit that Falstaff made everyone hack up their swords on purpose to make it look like they were broken in combat.
Bardolph admits they also "tickled" their noses with spear-grass to make it look like their noses were bloodied in battle with the "robbers."
Falstaff returns from talking with the nobleman (Sir John Bracy) and reports the news that the Percy family is in cahoots with the Welsh, the Scots, and Mortimer to overthrow King Henry.
The prince is needed at the castle ASAP, where Hal will likely get an earful from his dad about being such a rotten kid and a lousy prince.
Falstaff, ever the dispenser of great advice, suggest that he and Hal put on a play – Falstaff will play King Henry and Hal will play himself, so he can practice what he's going to say to his father, of course.
Falstaff gathers his props: a stool becomes a throne, a dagger a scepter, and a cushion a crown. He chugs a glass of wine to make his eyes look red from passionate crying and pretends to scold his "son," Prince Hal for being a thief and hanging out with low-life criminals.
Prince Hal says Falstaff makes a lousy king and they switch roles so Hal can pretend to be King Henry while Falstaff plays the prince.
As "King Henry," Hal says the prince shouldn't hang out with the disgusting "old fat man," Falstaff, that "villainous abominable misleader of youth." Falstaff (as Prince Hal) urges the "king" not to banish Jack Falstaff. Hal cryptically replies, "I do. I will."
Just then, the cops show up looking to haul Falstaff away to the clink for robbing the king's exchequer. Prince Hal talks to the sheriff and assures him that if Falstaff is guilty, he'll be made to pay. Meanwhile, Falstaff snoozes away behind the arras (a screen).
Peto and Hal rifle through Falstaff's pockets and find a bunch of receipts for food and wine.
Hal tells Peto that they must all go to war soon, but he assures his pal that he'll hook up all his buddies with good positions in the military.