Father and discarded son finally meet face to face, and all Daigo can say is “Why aren’t you dead?” and call Hyakkimaru a “half-born demon child.” It’s pretty harsh, but not at all surprising considering those words are coming from the man who fed his firstborn to demons.
As long as Hyakkimaru is alive, Daigo cannot have confidence in the future of his domain. The mere fact he is alive is proof that the deal is in the process of being destroyed, as evidenced by all the lord’s misfortune of late. Of course, he deserves all the misfortune coming to him.
Hyakkimaru skitters off when Daigo’s men launch arrows at him, while elsewhere Dororo and Sukeroku are taken prisoner and stashed in a cave. After trying to comfort Sukeroku (who found his village only to find it destroyed and his mom likely dead), Dororo slips out of a Dororo-sized hole, promising to find Hyakkimaru so they can save everyone.
Tahoumaru, having received testimony from the midwife, confronts his mother, who does not dispute the terrible accusations, and indeed has never for one day forgotten what was done. Tahoumaru can’t believe his parents would do something so monstrous, but that just goes to show you how much he idolizes his great lord father.
Daigo tells Tahoumaru of the hellish times before he was born, and how sacrificing his first son was the only way to stave off the utter ruin of his domain. Tahoumaru rightly rejects the notion his dad’s motivation was anything other than the desire for power and prosperity. He notes the appalling amorality of the action.
His protestations fall on deaf ears. Lord Daigo believes he is a lord because he was given choices and made the decisions that he made. The ends justify the means, and in any case, it’s too late to undo what he did because to do so would mean sacrificing the welfare of the domain for one person: Hyakkimaru.
Daigo made a terrible choice, and he knew it was terrible, but to him not sacrificing his son would have been more terrible. Thus, if he had the choice, he’d likely do it again. He tells Tahoumaru if he wishes to cancel the deal with the demons, he can go to the Hall of Hell to do so, but rightly assumes his son won’t do anything (in any case the hall spits him and his aides out with a gust of wind).
Dororo reunites with Hyakkimaru and connects the dots that Daigo and Tahoumaru are Hyakkimaru’s father and brother, something he’s actually cheerful about because he doesn’t know the truth, but also because Dororo’s family was so loving and he longs to have them back.
By the time they find Sukeroku, the kid is already tied to the Banmon with other hostages as an overture to a battle between Daigo’s armies and those of Asakura. Among the combatants is one of the men who burned killed Mio and burned her orphanage; Dororo has to hold him back to stop him from proving to all assembled that he truly is a demon.
Tahoumaru arrives on the battlefield, and while he acknowledges what was done to his brother is wrong, the preservation of the domain and its people takes precedence over one life, even if it is his brother. So, the two fight, as the Banmon ghouls gather, picking off soldiers and eventually combining to form Kyubi.
Hyakkimaru eventually slices Tahoumaru’s eye, but then their mother Oku arrives, to ask forgiveness of Hyakkimaru; not just for herself, but on behalf of her husband, her other son, and all the people of the domain who owe each day of their prosperity to Hyakkimaru’s long suffering. If no one else will take responsibility, she will, and does—by stabbing herself.
It would seem the demons accept her as a sacrifice to their appetites, as their power seems to increase immediately after Oku’s stabbing, to the point the Banmon crumbles to the ground, forcing Daigo and his men to retreat with Tahoumaru and Oku.
Things calm down from there, and there’s even a happy note to an otherwise ominous ending, as Sukeroku reunites with his mother and other villagers who had been hiding. Dororo notes that even Sukeroku and his mom are only alive thanks to Daigo’s cruel, heinous deed.
Dororo then reiterates his intention to stick with Hyakkimaru no matter what, even if his blood relations continue to reject him. In a world full of moral shades of gray, their bond as brothers-from-another-mother (though one is actually a sister) is thankfully absolute. Will they be enough to stand against the relentlessly turning wheels of destiny?