Holofernes, Nathaniel, and Dull have just come from dinner. Nathaniel compliments Holofernes’ wit, and mentions that he spoke with Armado earlier in the day. Holofernes says he knows Armado, and calls him ridiculous, criticizing his habits of speech especially. Holofernes can’t stand how Armado pronounces “doubt” and “debt” without vocalizing the “b.” Holofernes and Nathaniel converse a bit in Latin, and then Armado enters along with Costard and Mote.
Nathaniel fawns over Holofernes’ apparent intelligence. Holofernes looks down on Armado primarily because of how he speaks, though his own habits of speech (including unnecessary bits of Latin) can be seen as equally ridiculous.
Mote pokes fun at Holofernes and Nathaniel, saying “they have been at a great feast of languages and stolen the scraps.” He gives Holofernes a riddle and then asks him to name the five vowels. Mote and Holofernes trade quips at each other, and Costard is so delighted by Mote that he gives him a coin—his “remuneration.”
The lowly page Mote is able to outwit and poke fun at the supposedly better-educated Holofernes and Nathaniel. Costard is delighted to see someone match wits with the men who have been teasing him about his own intelligence.
Armado asks Holofernes if he is a teacher, and then explains that the king is entertaining the princess and her ladies in the afternoon, or, as he calls it, “the posteriors of this day.” Armado says that he and Ferdinand are very close friends and that he has the honor of presenting some kind of show to the princess on the king’s behalf.
Armado tries to affect an intelligent diction, but comically fails, with the silly phrase “posteriors of this day.” The king is now planning some kind of elaborate show to entertain the princess, which can be seen as a reflection on Shakespeare’s own theatrical production of Love's Labor's Lost.
Armado asks Holofernes what he should perform, and Holofernes suggests “the Nine Worthies,” a pageant of nine famous men from ancient and biblical to medieval times. He casts Armado, Nathaniel, Costard, and Mote in the performance and says that he himself will play three parts. Dull plans to dance along with the presentation of the pageant. Everyone is excited, and leaves to prepare for the show.
The pageant presents nine famous male heroes, symbols of ideal masculinity that the play’s men comically fall short of—a particularly pointed fact given Ferdinand and his men's initial desire to devote themselves to academic glory. Everyone is excited to put their efforts into producing a good performance, showing that pleasure and fun often involves work just as much as serious business does (a fact captured in the title of the play, which connects love with labor).