Lyra watches the Master and his dæmon anxiously glance to where the Tokay was. Lord Asriel greets the Master and the other Scholars who enter, and the Master fries poppy heads. Lyra carefully pulls down a big fur robe to lie on and tries hard to stay awake, but the Scholars talk exclusively of boring London politics. Just as she starts to nod off, the Master calls the room to attention and introduces Lord Asriel. Lord Asriel quickly rearranges where Scholars are seated and suggests that the Master sit in the back, near the Librarian (and the hidden Lyra). As the Master takes his seat, he whispers to the Librarian that Lord Asriel knew about the wine. They vow to argue against a vote for funding.
Lyra's professed interest in finding out what's going on in the wider world, combined with her disinterest now that she's actually hearing about it, speaks to her youth: she desperately wants to know about the world, but doesn't yet have the maturity to fully understand or interpret the events around her. That the Master wants to withhold funding from Lord Asriel reminds the reader that whatever's going on is all about politics—and somehow, Lord Asriel and the Master are on opposite sides in this.
Lord Asriel starts the projector and begins to speak. He says that he left a year ago on a diplomatic trip to Lapland, but in actuality, he went further north to try and figure out what happened to Grumman's expedition. Lord Asriel says that he also wanted to look into a natural phenomenon only seen in the North. He then introduces his first slide: a black-and-white photo that was taken at night. It shows a hut, philosophical instruments, a man in furs, and a small figure next to him. Lord Asriel explains that this photo was developed with silver nitrate emulsion. He then shows another photo, which was developed with a special emulsion. The photo is darker, but the man is lit up and seems to have glowing particles coming from his hand. Lord Asriel says that the glowing light is moving downward, not upward, and is actually Dust.
It's important to keep in mind that many things in this chapter don't make sense to Lyra and, because of this, also aren't supposed to make total sense to the reader. Following along with Lyra allows the reader to learn about her world and start to grow up with her, rather than engaging with her story as an experienced adult might. The fact that the second photo was developed with a special emulsion suggests that whatever Lord Asriel is studying is scientific in nature and can be measured and recorded.
Silence follows, and Lyra feels that this Dust is different from normal dust. Scholars begin to gasp and Lord Asriel draws their attention to the figure next to the illuminated man. He says it's not the man's dæmon: it's a child. One Scholar asks if it's a "severed child," but Lord Asriel says the child is whole. He says that the Dust is coming down and lighting the man. He then puts in another slide of an aurora borealis, which impresses the Palmerian Professor. Lord Asriel says that this photo is the regular emulsion, and puts in the next slide. The Master whispers again to the Librarian that they can't let Lord Asriel force a vote. The slide shows the same scene—but in the middle of the Aurora, Lyra can make out a city.
Lyra's perceptive nature shines through here and reminds the reader that while she may be naïve and inexperienced, she's still perceptive and is learning things all the time. The mention of the "severed child" suggests that there's something sinister going on in relation to Dust, while seeing the city in the Aurora indicates that there's also something wonderful and otherworldly about Dust and whatever Lord Asriel is studying.
The Scholars stir excitedly, and the Palmerian Professor asks if this is the "Barnard-Stokes business." Lord Asriel addresses a Scholar and says that Grumman was probably investigating this phenomenon, but Grumman is dead. As proof, he opens one of his boxes and explains that Grumman's expedition vanished a year and a half ago. When the crate opens, there's a moment of silence and then the Scholars babble in horror and confusion. Lord Asriel explains that this is Grumman's head; he found the body in the ice near Svalbard. He points out that Grumman's head was scalped, probably by the Tartars, and invites a Scholar to inspect it. They note that there's a hole in the skull and the Scholars discuss whether the panserbjørne were involved. Lyra doesn't know the word.
Again, not much of this makes sense to Lyra or the reader, but it certainly intensifies Lyra's interest in the North. This, unbeknownst to Lyra, leads her even closer to fulfilling her destiny, which the reader will soon learn means that she has to go north. The mention of the Tartars and the panserbjørne—the armored bears—sets up some of England's adversaries in this universe. The scalping in particular draws out the differences between England (which in this world is entirely Christian) and the northern Tartars, which Lord Asriel seems to imply are savage and fundamentally different because of the way they treat their dead adversaries.
The Palmerian Professor says that the king of Svalbard, Iofur Raknison, tricked his way onto the throne, built a palace and a university, and could've learned to scalp people like the Tartars. Everyone laughs, but the Palmerian Professor says that Iofur is capable of doing something like this, but he's also susceptible to flattery and could behave differently. He says that more than anything, Iofur wants a dæmon. The scholars laugh again. Lyra has no idea what they're talking about and, bored, she falls asleep.
Remember that in this world, all humans have dæmons—it's part of what makes humans human—so hearing that there's a being out there without one is odd and confusing for Lyra. The way that the Palmerian Professor speaks about Iofur also suggests that Iofur could be easily manipulated, something that directly contradicts what Lyra later learns about the bears and how their minds work.
Lord Asriel wakes Lyra up much later. He says they voted to give him money but won't tell Lyra what Dust is. He also refuses to let her look at Grumman's head. Lyra says that the Master looked for the wine before anything else and then asks if she can return to the North with Lord Asriel. He refuses, but promises to bring her back a walrus tusk with Eskimo carvings. Lyra frowns at him, but finally she and Pan head to bed.
The way that Lord Asriel treats Lyra shows that he thinks of her only as a child: withholding information about Dust, insisting she stay safe at Jordan, and promising to bring her a souvenir from the North are all things that make Lyra uncomfortably aware of her age. This does, however, set Lyra up to subvert this expectation that she's just a silly child.
After Lord Asriel leaves, the Master and the Librarian sit together with drinks. They discuss that Lord Asriel thwarted the assassination attempt, and the Master says that the alethiometer is showing that there will be awful consequences of Lord Asriel's research, and "the child"—Lyra—will have to get involved. The Librarian asks if Lord Asriel is involved with the Oblation Board, and the Master says he isn't. The Oblation Board is semiprivate and run by someone who also makes the Master nervous. The Librarian thinks of how the church is organized: after a pope moved the papacy to Geneva and set up the Consistorial Court of Discipline, the papacy itself fell by the wayside. In its place, the church gained absolute power through a collection of courts, colleges, and councils known as the Magisterium. The Oblation Board is under the Magisterium's protection, and it makes the Librarian nervous.
Through what the Librarian lays out in regard to the Magisterium, it becomes clearer that the Magisterium controls most things in Lyra's world. Jordan College is, presumably, under the Magisterium's jurisdiction, which means that the Master is possibly in a very precarious and dangerous position, given that he questions the Magisterium's power and where it's putting its resources and research. This also situates everything that happens in the novel as being fundamentally political, as everyone's actions necessarily need to be filtered through the lens of what the Magisterium might think about it.
The Librarian asks what the Palmerian Professor meant by "Barnard-Stokes." The Master says that the Church teaches that there are two worlds: theirs, and the spiritual world. Barnard and Stokes suggested that there are actually many more material worlds that are nearby but unreachable, and the Church silenced them. The Master says that there's strong evidence that there are other worlds, and the Librarian sarcastically says that they've just given money to Lord Asriel to go look for them. The Master says that he's in a tight spot and that Jordan College will look like "a hotbed of support for heresy" to the Oblation Board and the Consistorial Court. He says that "they" haven't forgotten Lyra, who will play a major part but can't know what she's doing. He hoped to keep her safe for longer by poisoning the Tokay.
The way that the Master talks about the disconnect between the evidence for other worlds and the way that the Magisterium has silenced that research illustrates how much control the Magisterium has over life in Lyra's world. In particular, it’s clear that the Magisterium is willing to do anything to gain and maintain power; it cares about being powerful more than it cares about discovering anything about the world it rules over. That the Master tried to protect Lyra by poisoning the Tokay shows again that choices are often not just right or wrong; sometimes, there are no good choices.
The Librarian believes that Lyra wouldn't listen even if the Master were able to explain things to her, but the Master thinks that Lyra might be interested in Dust. He says that knowing about it might help her on her journey. The Master also explains that Lyra will have to betray someone, which will be terrible. He says that sharing something would help him be less anxious, but the Librarian points out that as old men, it's their job to be anxious about the young while the young scorn them for it.
Again, it's telling that the Librarian thinks this way about Lyra: it shows that most adults don't think that she's capable of mature, considered thought about anything, and instead only see her as a headstrong and wild child. For Lyra, this means that she's going to have to prove herself to adults and show that she's capable of behaving maturely.