It is revealed that the woman who was attempting to woo Gawain and give him all of the presents at the previous castle was truly testing his abilities as a knight, something the Green Knight expected that he would fail. Gawain, now extremely nervous and ready for the end, honors his agreement and takes off his armor to let the Green Knight take his swing. Gawain flinches the first time the axe was lowered, something that he got repremanded for by the Green Knight. The next time, he didn't flinch as the axe approached his neck and the Green Knight was satisfied with continuing. When the Green Knight takes his swing, he hits Gawain with only a small scratch and Gawain immediately gets up and says that that was the Green Knight's one and only swing, which he accepts. The Green Knight states that only barely hitting him was intentional and that he wouldn't have been hit at all if he wouldn't have flinched and if he would have given the girdle to the Lord of the previous castle during their exchange.
Although the Green Knight states that he is the most faultless person that he has come across, Sir Gawain uses the girdle and the scratch throughout his life as a symbol that he was not living up to the expectations of a knight, even when the other Knights and Arthur in Camelot don't take anything from it, likely seeing him as more flawless than any of the rest of them.