"You see but you do not observe.”

After Sherlock makes several correct guesses about Watson's new life, Watson points out that he has the same eyes as Sherlock yet fails to gather so much information from what he sees. This prompts Sherlock to point out the difference between seeing and observing. Most people, including Watson, go about their life merely seeing. Sherlock, however, is always observing and drawing conclusions from the data.

“It was not merely that Holmes changed his costume. His expression, his manner, his very soul seemed to vary with every fresh part that he assumed. The stage lost a fine actor, even as science lost an acute reasoner, when he became a specialist in crime.”

Watson describes how completely Holmes embodies the role of the clergyman once he dons his costume. The irony of the costume is that Holmes is using the clothes of a clergyman to gain trust dishonestly and hide his true identity. However, Holmes is so good at what he does that he appears very pious even in the midst of cultivating a deception. This fact motivates Watson to consider what a fine actor Holmes would have made and to highlight the idea that someone as brilliant as Holmes could have been anything he chose in terms of a career. That he chooses to solve mysteries elevates the profession.

"As to the photograph, your client may rest in peace. I love and am loved by a better man than he. The King may do what he will without hindrance from one whom he has cruelly wronged."

In these lines from Adler's letter, she describes how she managed to come out on top over the King yet again. Adler has decided not to expose the letter, not because of a change of heart, but because she now loves someone else, someone better than the King. She manages to belittle the King and build up her new husband all in one statement. The King is free to marry the Scandinavian princess—not because he won anything, but because Adler has allowed him to do so.

"And that was how a great scandal threatened to affect the Kingdom of Bohemia, and how the best plans of Mr. Sherlock Holmes were beaten by a woman's wit. He used to make merry over the cleverness of women, but I have not heard him do it of late."

In the last paragraph of the story, Watson sums up the main points of the case, including the averted scandal and Adler's outsmarting of Holmes. By conflating these two points, Watson equates a woman outsmarting Holmes with an international scandal. These lines reveal that the biggest character change over the course of the story occurred in Holmes through his realization about the intelligence of women.