Arthur is hanging out with Merlyn at Camelot, and lounging around in a robe he inherited from his father, which is decorated with the beards of fourteen kings his dad defeated. Itchy!
They're having some downtime in between wars, and Arthur is happy that a recent battle against Lot of Orkney went swimmingly.
Arthur's bragging a bit about how his sword Excalibur scared off all the Northern Kings.
Merlyn tries to put the brakes on Arthur's arrogance by reminding him that he got the throne in a sort of unconventional way that some people aren't thrilled with. The Northern Kings will be back (there's six of them, the so-called Gaelic Federation).
Arthur essentially says, "So? Bring it on."
Finally, Merlyn cuts to the chase and straight up tells Arthur he's being stupid for saying that the recent battle was "lovely." And when Arthur begs for Merlyn to elaborate, he roundly scolds the King.
He wants to know how Arthur will handle things when he doesn't have a tutor around to get him out of jams and to tell him what to do.
But, back to their argument. Merlyn reminds Arthur that 700 of his men were killed—and not knights. We're talking foot soldiers— those of the lower classes.
We learn that Merlyn won't be around soon, since his fate is to fall in love with a chick named Nimue, who will steal his magic and seal him up in a cave for several centuries. Bummer.
Merlyn tells Arthur to never take anyone's advice and then (wait for it) proceeds to advise him to stop thinking like his father.
To make his point about remembering the little guys (i.e. the 700 soldiers who were killed at this "lovely" battle), Merlyn asks Arthur what he thinks about Sir Bruce Sans Pitié.
Arthur promptly replies that he's just a marauder who gets over on people any way he can, and then runs off scared when a "real" knight shows up.
Merlyn keeps it real by telling Arthur that basically all knights are like Sir Bruce. Might Makes Right, and what makes a knight is his armor, horse, and castle. Knights play games with each other, when it's deadly serious for the poor folk roped into their battles.
He also reminds Arthur that the Gaelic Kings aren't against him because they don't believe that Uther was his father, but rather because the throne is insecure… and now Ireland has a chance to settle some scores.
Arthur's a good guy, though: he realizes after Merlyn's speech that he's been too selfish and hasn't been thinking of the poor people without armor. He understands that Might is not Right.
This realization is not enough, Merlyn points out. Now what is Arthur going to do about the problem?
And then things take an ominous turn. Arthur spies one of his workers down below in the courtyard, and wonders aloud to Merlyn what would happen if he dropped a stone upon his head. Uh-oh… maybe Arthur hasn't learned as much as we had hoped.
Merlyn points out that it would probably kill him, but Arthur is King, so he can do whatever and not get in trouble.
So, Arthur throws the stone at Merlyn and knocks his pointy wizard hat off. Psych!