The coach deposits David at an inn in Yarmouth, and the next morning, Mr. Barkis arrives to bring him the rest of the way home. David tells Barkis that he relayed his message to Peggotty and is surprised at Barkis's "gruff" response. David presses Barkis further, and Barkis says Peggotty has not given him an answer and that he does not intend to press her for one. However, he asks David to tell Peggotty that he is waiting for a response.
David's confusion during this exchange with Barkis is not simply the result of his romantic inexperience; Barkis's method of courting Peggotty is idiosyncratic, and mostly played for comic relief.
David is overcome by a "strange feeling" as he approaches his home; he realizes that it is no longer the happy place he remembers, and thinks it might have been better to stay at Salem House. Pushing aside his fear of Mr. Murdstone and Miss Murdstone, David enters the house only to hear Clara singing. The sound makes David think of his early childhood, and he approaches to find her singing to a baby. When she sees David, Clara embraces him and introduces him to his baby brother. David is so happy that he later wishes he "had died" during the reunion.
Despite David's misgivings, he actually is able in this scene to briefly return to the home he has otherwise lost: the image of David with his mother and younger brother is one of perfect domestic bliss. It's significant, however, that David feels as though the moment is also a return to the past, and even more significant that he wishes to die then and there. Even if the Murdstones weren't a factor, this kind of "infantine" happiness is not something that can last indefinitely; the only way to remain a baby in his mother's arms forever, as David puts it, is to die.
Mr. Murdstone and Miss Murdstone are out, so David, Clara, and Peggotty spend a happy afternoon together. Over dinner, he relays Barkis's message to Peggotty, who laughs and grows flustered as she denies having any intention of marrying him. Clara teases her, but David notices that she also looks "anxious" and "careworn." Eventually, she asks Peggotty not to leave her, and Peggotty swears not to, though there are "some Cats that would be well enough pleased if she did."
Peggotty's position as Clara's housekeeper limits her ability to marry and establish a household of her own. Although the novel justifies this by attributing it to loyalty (and therefore Peggotty's own wishes), a real-life servant might be equally constrained by considerations like financial necessity.
David, Clara, and Peggotty continue to chat after dinner, David describing his experiences at school and reveling in the apparent return to older, happier times. Suddenly, Peggotty asks what has happened to Miss Betsey, and then wonders whether she might leave anything to David in her will. Clara is skeptical, but Peggotty continues to press the issue, saying Miss Betsey might "forgive" David (for being born a boy) now that he has a brother.
Even as David is enjoying the return of his old life, Peggotty breaks the mood by reminding him and Clara of how David's position in the household has now changed: her question about Miss Betsey's will is a veiled reference to the fact that David is now unlikely to inherit anything, since Mr. Murdstone will presumably leave everything to his new son.
This upsets Clara, who accuses Peggotty of being jealous of the baby, and suggests that she should marry Barkis after all. Peggotty retorts that that would make Miss Murdstone happy, and the two women get into an argument, with Clara defending Miss Murdstone's place in the household on the basis of her (Clara's) incompetence. She also accuses Peggotty of "insinuating" that Mr. Murdstone is cruel to David, and defends her own "submissiveness" to her husband. David writes that he later suspected Peggotty provoked this argument in order to allow his mother to vent her feelings.
Clara's defensiveness suggests that she's aware on some level that the Murdstones are treating her and David poorly. With that said, there's an element of truth to her excuse-making: by the standards of the day, Clara is correct when she says she ought to be "submissive," though for a modern reader, the way in which Murdstone exploits Clara's submissiveness is likely to be an argument against it. Furthermore, Peggotty seems to share Clara's assessment of herself as childish and incompetent, since she provokes the whole argument to humor her mistress.
That evening proves to be the "last of its race," and it is cut short by Mr. Murdstone and Miss Murdstone arriving home. Clara sends David to bed, however, and he does not see the Murdstones until the following morning. At breakfast, David apologizes for biting Mr. Murdstone and asks for his forgiveness. Miss Murdstone then asks how long David will be visiting, and begins to cross off the days on a calendar. Later that same day, David upsets Miss Murdstone by holding the baby, and Clara eventually concedes that Miss Murdstone is right to disapprove.
Just as Peggotty hinted, the birth of Clara and Murdstone's child has pushed David further outside the family than ever. By crossing off the days until David's departure, Miss Murdstone clearly indicates that David is just a visitor (and an unwelcome one at that). He isn't even allowed to hold his own brother, presumably because doing so would imply that he had some recognized relationship to the baby.
A few days later, Clara makes the mistake of comparing David to the baby and remarking that they look similar. Miss Murdstone retorts that the two children do not resemble each other at all and storms out of the room. This incident, and others like it, chip away at David's self-esteem. He notices, for instance, that everyone becomes anxious when he enters a room, and he realizes that his mother is afraid that the Murdstones will lash out at one or both of them.
Miss Murdstone's reaction to Clara's offhand remark emphasizes how unwilling she is to acknowledge David as a member of the family; even a reminder that David and his brother are related is unacceptable in Miss Murdstone's eyes. In a more subtle way, the family's reactions when David enters the room also underscore his status as an outsider. Although it seems unlikely that David is ever interrupting a truly happy scene, his appearance constantly disrupts whatever domestic harmony does exist in the household.
Partly in an attempt to protect Clara, David avoids his mother, spending many evenings with Peggotty. This also attracts Mr. Murdstone's disapproval, however—ostensibly because David is "sullen," but really because Mr. Murdstone needs David around to use as leverage with Clara. Clara attempts to question the Murdstones' characterization of David, but backs down when her husband and Miss Murdstone imply that she is challenging their judgment. After scolding Clara for being "weak and inconsiderate," Mr. Murdstone orders David to spend his free time with the rest of the family. He also chastises David for his relationship with Peggotty, whom he describes as "low and common company."
The fact that Mr. Murdstone uses Clara's love for David as a way of manipulating her becomes even more villainous in the context of the time: Victorian England idealized mothers and motherhood, so Murdstone's willingness to use it against Clara is especially underhanded. Meanwhile, he noticeably does not consider Peggotty a part of the family in the way that David and Clara do, solely on account of her class status.
David complies with Mr. Murdstone's wishes, and consequently spends most of his time feeling unwanted—or, as he puts it, "a blank space […] which everybody overlooked, and yet was in everybody's way." He is therefore relieved to return to school, though it pains him to say goodbye to his mother and new brother. As Barkis and David drive away, Clara calls out to her son one more time and holds the baby up so that David can see him. David implies that this was the last time he ever saw his mother, and says the image remained in his mind long afterwards.
At its worst, the Murdstones' treatment of David not only makes him feel like an intruder, but threatens to erase his own sense of self: he is treated as though he were invisible, and consequently begins to feel as though he truly is just a "blank space" with no identifiable features. His mother's actions as he leaves seem intended to remind him of who he is in relation to her and the baby, which is perhaps one reason why the moment makes such an impression on him: it marks the end of his childhood family.