Holofernes and Nathaniel discuss Don Armado, with whom Nathaniel has been conversing. They mock his inferior intellect, criticizing his pronunciation and saying that they abhor "such rackers of orthography" (V.i.20).
Armado, Moth, and Costard enter; Armado tells the learned men that the King has asked him to prepare "some delightful ostentation, or show, or pageant, or antick or firework" (V.i.105-7) to entertain the Princess and her party. He asks Holofernes and Nathaniel for their help in planning this entertainment, and Holofernes suggests that they present a show of the Nine Worthies.
The men discuss who will play the roles of the Worthies, with Holofernes saying that he will play three of the roles himself. They then go off to plan their show.
The play-within-the-play that the learned men begin planning in this scene is a common facet of Shakespeare's plays. Many of his most famous plays, such as Hamlet and A Midsummer Night's Dream, include scenes of plays. These scenes allow the playwright to present a view of the theater experience (for players, playwright, and audience) on the stage itself. We will see when the play of the Nine Worthies takes place that the audience behaves in a way that may be surprising.
Next, Moth makes fun of the learned men by saying to Costard, "They have been at a great feast of languages, and stolen the scraps" (V.i.37-8). This may be part of Shakespeare's critique of scholarship and rhetoric.
Holofernes and Nathaniel are very critical of Don Armado, and Holofernes also notes Costard's unsuccessful attempt to appear scholarly. Costard says, "thou hast it ad dunghill, at the fingers' ends, as they say," and Holofernes replies, "O, I smell false Latin; dunghill for unguem" (V.i.72-4). Holofernes also makes some mistakes in his Latin, however, as in the first line of this scene. Clearly, Shakespeare mocks the use and misuse of language by almost every character in this play.
In this scene, we see once again the contrast between Dull and his learned friends. Dull is present from the beginning of this scene, but does not speak until the very end. Holofernes notices this and says, "Via, goodman Dull! thou hast spoken no word all this while," and Dull replies "[n]or understood none neither, sir" (V.i.141-2). Shakespeare implies that Dull's inability to follow the conversation of Holofernes, Nathaniel, and Armado stems from his notably inferior intellect.