Gulliver and his master continue their discussion of concepts that are difficult for the master to comprehend — especially those related to lying and doing evil. Gulliver explains the role of Houyhnhnms and the Yahoos in Gulliver's country, and, of course, the master is shocked when he learns how the roles are reversed. The master observes that the Yahoos in his land are better adapted for their lives than Gulliver. The master also compares the Houyhnhnms to the Yahoos and determines that the Houyhnhnm, as an animal, is much more functional than the Yahoo.
Here, Swift begins to contrast the natural innocence of the horses with the depravity of the European Yahoos. He repeats the discussion about lying, thereby emphasizing the Houyhnhnms' uncorrupted reason; the horses cannot understand the nature of a lie.
Swift balances the earlier discussion of clothing by discussing the Houyhnhnm vocabulary. He infers that power, law, government, and punishment (words that have no equivalent in the Houyhnhnm language) are all artificial. Like clothing, which conceals and restructures the appearance of the body, these institutions restructure a people. They are Swift's moral equivalent of the physical clothing that the European Yahoo wears.
Swift attacks the legal profession by quoting many legal terms. The Houyhnhnms have no such words; natural virtue requires no lawyers. Besides being a satiric end in itself, this fun with words prepares us for the discussion of European social institutions.
the least tincture of reason the smallest trace of reason; here, meaning that European Yahoos have no more ability to reason than do the savage Yahoos.
circumlocutions roundabout, indirect, or lengthy ways of expressing something.