Rosalind (still disguised as Ganymede) is impatiently awaiting Orlando, who is now late. Celia suggests that he has gone to sleep.
Rosalind is extremely sensitive to Orlando’s presence, absence, or tardiness.
Silvius approaches and gives a letter to Rosalind, which, he reports, Phebe wrote with an angry look on her face—a “stern brow.” Rosalind reads it and tells Celia it is a list of insults, and wonders why Phebe would write such a letter; she first accuses Silvius of being its author, assuming no woman could write so rudely and injuriously.
Silvius, blinded by love, has followed Phebe’s orders to deliver her love letter to Ganymede. As she does earlier, Rosalind makes a generalization about women, while appearing as a man.
Rosalind then reads the letter aloud, interjecting “Did you ever hear such railing?” The content of the letter, however, is an expression not of insults or chiding but of adoration. It proclaims such things as “Whiles you chid me, I did love; / How then might your prayers move!” Celia says that she is sorry for Silvius, since his love now loves Ganymede. But Rosalind says that she has no pity for him since he loves someone like Phebe. Rosalind then orders Silvius to go report to Phebe that she (i.e. Ganymede) will only love Phebe if Phebe loves Silvius. Silvius departs.
Rosalind has misrepresented the contents of Phebe’s letter. We can assume that she described Phebe’s outpouring of affection as insulting because even though it is not actually injurious, she herself is disgusted by it. Meanwhile, the gender games are getting wilder: Phebe loves "Ganymede," Orlando is pretending to love Rosalind who he thinks is being played by "Ganymede" whom he doesn't love, while "Ganymede" loves Orlando.
Oliver enters, looking for the sheep cottage owned by Ganymede and Aliena. He then notes that the two people he is speaking to fit Orlando’s description of Aliena and Ganymede, and asks if they in fact they are the owners of the cottage. When they confirm that they do, Oliver gives to Rosalind a bloody napkin, which was sent to her by Orlando. Rosalind is confused, and Oliver explains: a little bit ago, Orlando came across a man (Oliver, though Orlando didn’t recognize him yet) sleeping under a tree with a snake wrapped around his neck. At the sight of Orlando, the snake slithered away, drawing attention to a lion crouching in the bushes. When Orlando discovered that the sleeping man was in fact Oliver, he initially planned to leave his cruel brother as lion’s prey, but then kindness got the best of him, and he fought off the beast, getting wounded in the process.
The men of Frederick's court—primarily Frederick and Oliver—are characterized by their deviousness, hunger for power, and hatred and envy. But Orlando has always been depicted as more natural—he was denied even an education. In this scene, his natural bravery and goodness win out over his momentary "courtly" instinct to just let his brother be killed. Orlando is truly good and principled, and in the forest these traits which were his "enemies" when he was at court are once again truly virtues.
Oliver reports that in response he himself has had a conversion to kindness and that he cared for Orlando’s wound before coming to deliver the napkin to Ganymede so that he would excuse Orlando’s “broken promise.” Rosalind faints, and Celia tries to excuse it as an effect of the sight of blood. When Rosalind comes to, Oliver comments that she lacks "a man's heart," but she responds by telling Oliver to report to Orlando how well she “counterfeited” her swoon, just as she had taught him in their lessons. Oliver thinks the faint must have been authentic, but Rosalind assures him it was faked.
Orlando’s moral strength and ability to overlook his brother’s evildoings, has—in the realm of the forest—inspired a dramatic change in Oliver, who turns suddenly and completely good. Rosalind is overwhelmed by the sight of Orlando’s blood, and faints. But fainting is not a "manly" thing to do, and so to preserve her disguise as "Ganymede" she has to pretend that she fainted in order to convincingly play the role of "Rosalind" that she has taken on for Orlando.