In the conversation, the narrator feels embarrassed after hearing about Simon's comments. Despite feeling that this issue is not the most critical, it still bothers them, especially since Simon once apologized but then misrepresented the situation to his friends. This reflects a lack of integrity on Simon's part, exacerbated by the influence of his friends.
Daemon expresses his concern that Simon's actions were unacceptable, indicating that he cares about the narrator's feelings. Although the narrator tries to downplay the issue, Daemon is clearly affected and feels compelled to address it. His determination to handle the situation shows his protective nature and underscores the importance of loyalty in their relationship.