When Merlin creates a primitive assembly line so that he can take Arthur on the squirrel lesson, everything's working fine. When the duo return, it's giving Ector and Kay, who decided to put a stop to it, the worst Humiliation Conga of their lives.
The Wizard's Duel; shapesifters outwitting and squashing each other.
The fact that Merlin beat Mim with the exact opposite method. While she went big and strong, he became the smallest most insignificant thing you could think of, and oh did it pay off.
There's also the fact that he's simultaneously one-upping her Loophole Abuse. Mim set the rules as 1) no disappearing, 2) no vegetable or minerals, and 3) No imaginary beasts like "pink dragons and stuff". When she points out that she never said no purple dragons, Merlin becomes a germ. It's not invisible, just tiny, and it's also not a vegetable or mineral, so it shows her up while still abiding by the rules of the contest.
Also counts as an Animation of Awesome: Merlin and Mim maintain their overall coloration (blue and pink), as well as other identifying characteristics such as Merlin's glasses, and each character's hairstyle. For this reason, it is considered one of the greatest scenes of character animation ever.
Archimedes, when he sees Wart in fish form and trying desperately to escape from the pike, immediately comes to his rescue and goes through great lengths to save him.
Sir Ector gets a minor one. When he's training Kay in swordplay, he gets alerted to what's going on in the kitchen and tries to call Kay off. Kay can't hear him due to his helmet, so after blocking a few blows, Ector gets fed up and knocks him silly with a single blow of his sword. Considering how big and strong Kay is, and that he felt the blow right through his helmet, it shows Ector as a Retired Badass. Also note that Ector doesn't wear a helmet, but his much bigger son needed protection to face him.
The girl squirrel taking on a fully grown, yet dimwitted wolf to save her beloved Arthur from him.