At the end of Cobra Kai season 2, Daniel LaRusso felt he failed and he shut down the Miyagi-Do dojo, but in Daniel-san's defense, he actually proved to be a better sensei than Mr. Miyagi (Noriyuki "Pat" Morita) in many important ways. After taking on Robby Keene (Tanner Buchanan), the estranged son of his rival Johnny Lawrence (William Zabka) as his pupil, Daniel opened the doors of his dojo to anyone who wanted to learn Miyagi-Do karate in Cobra Kai season 2. Daniel turned the late Mr. Miyagi's home into a training center and eventually, he gained a handful of students including his daughter Samantha (Mary Mouser), many of whom had quit training at Cobra Kai. It was a teaching challenge beyond anything Mr. Miyagi attempted.
As Daniel explained to his students, Mr. Miyagi wasn't looking to train anyone or open a school — LaRusso came to him because he was in desperate need in The Karate Kid. When Mr. Miyagi agreed to teach Daniel karate, he had a very specific and defined goal in mind: Daniel-san only needed to learn enough to make a respectable showing against the Cobra Kai at the 1984 All Valley Under 18 Karate Tournament. Miyagi sized up Daniel's abilities and limitations and designed a very unorthodox way of training LaRusso that ultimately worked: Daniel unexpectedly beat Johnny won the championship. Afterward, Miyagi continued to teach LaRusso because they had become best friends and the old sensei wanted to pass his family's karate to Daniel-san.
In Cobra Kai season 2, Daniel ambitiously trained multiple students, using a mix of Miyagi's system of doing household chores to learn muscle memory and new techniques that his sensei taught him in after The Karate Kid movies. Cobra Kai season 2 ended with the Miyagi-Do/Cobra Kai dojo war erupting in an all-out brawl at West Valley High that left Johnny's beloved top student, Miguel Diaz (Xolo Mariduena), critically injured, and also sent Sam to the hospital. Daniel felt the crushing weight of his own failure after this tragedy and he was ashamed of what Mr. Miyagi would have thought of his hubris. But did Daniel-san really fail as a sensei? In truth, the results of Cobra Kai season 2's dojo war tell a different story.
Daniel's ultimate goal for Miyagi-Do was to teach all of his students enough fundamentals for self-defense against Cobra Kai and he succeeded. Miyagi-Do had two major confrontations against Cobra Kai in season 2 and LaRusso's pupils won both. Using the Wheel Technique Daniel taught them, Robby and Sam defeated several Cobra Kai, including Hawk (Jacob Bertrand), in a mall food court brawl to rescue Demetri (Gianni Decenzo). The West Valley High fight in Cobra Kai's season 2 finale yielded even more impressive results: Except for the youngest Cobra Kai and Miyagi-Do students, (neither won as a security guard stepped in), every Miyagi-Do student beat their Cobra Kai opponent — even Demetri, who shockingly beat Hawk.
In fact, Samantha has proven herself to be a better Karate Kid than Daniel was at her age. Sam is an incredibly capable fighter when she has to be and, like her dad did in The Karate Kid Part II, she won her fight against Tory Nichols (Peyton List), who was possibly out to kill her like how Chozen (Yuki Okumoto) wanted to kill Daniel. Not that Daniel would be proud of her for this, but Sam even beat Tory at a drinking contest because she applied Miyagi-Do's meditation and focus techniques.
Daniel felt like he failed as a sensei because Johnny's son Robby — who is also Daniel's student — crossed the line and kicked Miguel off the balcony; after all, Miyagi once said that there's no such thing as a bad student, only a bad teacher. But Daniel was actually a very good teacher and he tried to bring out the best in Robby. The flaws in Robby's character come from the fact that he's an angry kid who felt abandoned by his mother Shannon (Doira Baird) and his father. Daniel feels he's to blame for what Robby did to Miguel but he isn't — the fault is entirely Robby's.
If it weren't for Daniel and the quality of his karate instruction, Cobra Kai would have run roughshod over the kids who became Miyagi-Do students. Daniel worked with multiple kids with wildly varying skill levels and he managed to reach them all, even Demetri, after a lot of frustrating trial and error. LaRusso took on an even more difficult mission than Mr. Miyagi, who only had to instruct one student at a time, and he succeeded. It's every student's job to surpass their teacher and Daniel actually became a better sensei than his beloved mentor. Though in his grief, LaRusso can't see the good he accomplished at the end of Cobra Kai season 2, Mr. Miyagi would understand what happened and he'd be proud of Daniel-san.
Cobra Kai is available to stream on Netflix.