David remembers how, at their last meeting, Steerforth had asked him to remember him at his best. David says that he had always done so, and couldn't "change now, looking on this sight."
Despite the harm Steerforth did to the Peggottys, David doesn't seem to have ever really blamed him for his actions. Given that Dickens depicts Steerforth as being unable to control his impulses and actions, David's leniency seems somewhat justified, but it also contrasts starkly with the lifelong consequences the affair has for Emily.
Some local men who had known Steerforth carry his body up toward the house where Ham is, but hesitate to place him inside. Instead, they go to the inn, and David arranges to take the body to London that night; he feels that he should be the person to inform Mrs. Steerforth of her son's death. As David makes the journey, he feels as though he is surrounded by the "ashes of his youthful friendship," but when he arrives in Highgate, the Steerforths' house looks exactly as it always has.
Steerforth was one of David's last remaining links to his early childhood, and David has now effectively lost both Steerforth himself and the innocent memories of their friendship (Steerforth's elopement with Emily having tainted the latter). This is a necessary part of David's journey to adulthood, largely because David was all too willing to follow Steerforth's lead rather than think and act for himself; significantly, it is only now that Steerforth—David's "bad angel"—is dead that David is free to marry his "good angel" Agnes, whose influence over him is appropriately subtle and feminine. At this point, however, the loss of his "youthful friendship" is still painful to David.
When David finally nerves himself to ring the bell, he tells the maid that something has happened, and that he needs to speak to Mrs. Steerforth directly. He then waits in the drawing-room, surrounded by mementos of Steerforth, as the maid takes his card up to Mrs. Steerforth and Rosa. Eventually, the maid returns and tells David that Mrs. Steerforth is ill, but that he can see her in her chamber. This turns out to be Steerforth's old room, which Mrs. Steerforth says is better suited for an invalid. David guesses, however, that she has moved to it in order to immerse herself in memories of her son. Rosa, meanwhile, seems to guess instantly that David is there with bad news and watches him closely.
Mrs. Steerforth's obsessive love for her son has led her, in his absence, to completely immerse herself in surroundings that remind her of him. Like Mr. Wickfield's "indulgence" in memories of his late wife, Mrs. Steerforth's actions exemplify the dangers of living in the past; in Mrs. Steerforth's case, she's effectively buried herself alive in a shrine to her son.
Mrs. Steerforth expresses her condolences for Dora's death, and David replies that they all "must trust to [Time]" in grief. This unnerves Mrs. Steerforth, and she guesses that Steerforth is sick. David says that Steerforth is "very ill," but when Mrs. Steerforth asks whether he has reconciled with her son, he can't reply. Instead, he mouths the word "Dead" to Rosa. Mrs. Steerforth, however, does not see this, and David tries to break the news to her gently, hinting that "if" Steerforth had been sailing during the storm, something might have happened to him.
David breaks the news of Steerforth's death in much the same way the news of Clara Copperfield's death was broken to David as a child, first saying Steerforth is sick and then that he had died. In part, this underscores the parallels and differences between David and Steerforth; both were single children who grew up very close to their mothers, but who ultimately became very different sorts of men. It also perhaps speaks to how traumatic Steerforth's death is for David, in that it brings back (consciously or unconsciously) memories of his mother's death.
Upset, Mrs. Steerforth asks Rosa to come to her. Rosa does, but also asks whether Mrs. Steerforth's "pride" is satisfied, now that Steerforth has paid with his life. Rosa continues on over Mrs. Steerforth's moans, asking her to look at the scar Steerforth gave her. Steerforth's temper, Rosa says, was the direct result of Mrs. Steerforth's temperament, as well as her indulgence of her son. David tries to stop Rosa, but she ignores him, insisting that Mrs. Steerforth "moan for [her] corruption of [Steerforth]," and mocking her for seeing herself as a victim now.
As far as Rosa is concerned, Mrs. Steerforth bears ultimate responsibility for her son's death—not only because she refused to reconcile with him, but also because it was her indulgent upbringing that made Steerforth into the man who ran off with little Em'ly and then refused to return home on his mother's terms. She gestures to her scar as proof of Steerforth's spoiled and careless nature, which caused him to repeatedly hurt the women around him, including, eventually, his own mother: the grief Mrs. Steerforth feels now, Rosa implies, is what Rosa herself has felt most of her life.
Rosa continues, saying she loved Steerforth more truly than Mrs. Steerforth, and that she would have endured any mistreatment if she could have been his wife. She also suggests that Steerforth could have loved her and been a better person because of it: when he grew up, she says, he felt guilt over the scar he gave her, and he was "freshest and truest" when he was in her company. Rosa meanwhile, allowed Steerforth to court her and treat her as "a doll, a trifle for the occupation of an idle hour, to be dropped, and taken up, and trifled with, as the inconstant humour took him." Eventually, she says, she and Steerforth drifted apart under the strain of his own personality, and since then, Rosa herself has been treated like a "disfigured piece of furniture" in the household.
According to Rosa, her relationship with Steerforth could have followed a very conventional path if it hadn't been for Mrs. Steerforth's influence: Rosa claims she would have been a traditional Victorian wife, influencing her husband for the better through her very meekness and submissiveness. Instead, Rosa became one of Steerforth's many conquests, and has been "disfigured" physically and emotionally: although not marked in the same way as little Em'ly (Rosa, presumably, didn't sleep with Steerforth), Rosa has similarly lost the possibility of ever marrying or establishing a family.
David begins to say that Rosa ought to feel compassion for Mrs. Steerforth as a grieving mother, but Rosa interrupts, asking who will feel sorrow for her. David again tries to speak, referencing Steerforth's "faults," but this only angers Rosa, who says he "had a soul worth millions of the friends to whom he stooped." David assures Rosa that he himself loved Steerforth, and finally finishes what he has been trying to say, urging Rosa to help Mrs. Steerforth, even if she cannot forget what she or her son did. Rosa accordingly goes to Mrs. Steerforth, cursing David and telling him to leave. As he does, he looks back to see Rosa weeping over Mrs. Steerforth and trying to revive her.
Rosa initially reacts with exasperation to David's demand that she pity Mrs. Steerforth; Rosa's own feelings for Steerforth are, in her mind, at least as strong as his mother's, but she has no official relationship to him and will consequently be as overlooked now as she was during Steerforth's life. Interestingly, however, she does ultimately go to try to comfort Mrs. Steerforth. Since it later becomes clear that Rosa hasn't in fact forgiven Mrs. Steerforth for the role she arguably played in Steerforth's death, Rosa's ongoing care for her seems less like genuine sympathy and more like an inability to move beyond her own feelings for Steerforth and her bitterness over her own past.
David returns later that day with Steerforth's body, and learns that Rosa is still with Mrs. Steerforth, who is insensible despite doctors' efforts to revive her. He then walks around the house pulling down the shades on all the windows, finally reaching the room where Steerforth's body is and lingering there, where "all the world seemed death and silence."
Steerforth's death effectively kills Mrs. Steerforth as well, since she never entirely recovers her senses afterwards. This makes sense, given how completely her life up until this point has revolved around her son; with Steerforth gone, most of Mrs. Steerforth's identity is gone as well.