Warning: SPOILERS ahead for The Mandalorian season 2, episode 3, "The Heiress."
The Mandalorian's latest episode, "The Heiress," resolved a plot hole that has been present in the series from the start: why is Din Djarin (Pedro Pascal) not allowed to remove his helmet, when Mandalorians elsewhere in Star Wars canon have done so? After arriving on Trask, where Frog Lady told him Mandalorians had been sighted, Din found himself being rescued by none other than Bo-Katan Kryze (Katee Sackhoff), a character from Star Wars: The Clone Wars and Star Wars Rebels. Just as he was about to celebrate finally being back among his people, Din was shocked when Bo-Katan and her comparions Axe Woves (Simon Kassianides) and Koska Reeves (Mercedes Varnado) removed their helmets.
As established back in The Mandalorian season 1, Din Djarin has worn Mandalorian armor ever since he was a foundling, and was raised among a Mandalorian clan who taught him that removing his helmet in front of another person would mean surrendering his identity as a Mandalorian. He was tempted to do so in episode 4, "Sanctuary," when romance stirred between him and a woman called Omera (Julia Jones), but ultimately walked away from the promise of a simpler life. Din was seen without his helmet by IG-11 in The Mandalorian's season 1 finale, after being persuaded that droids do not count as people. However, Baby Yoda has never seen his surrogate father's real face.
This strict rule is inconsistent with the depiction of Mandalorians in Star Wars: The Clone Wars and Star Wars Rebels, where characters like Bo-Katan Kryze and Sabine Wren freely remove their helmets. Din Djarin's first assumption upon seeing the Mandalorians expose their faces was that, like Cobb Vanth (Timothy Olyphant), they had wrongfully appropriated the armor. Instead, he learned that his own clan are not actually representative of wider Mandalorian culture; they are the Children of the Watch, a group of religious zealots who broke away from the rest of Mandalorian society.
The "Watch" in question is the Death Watch, a group of Mandalorian terrorists who tried to overthrow the pacifist government of Mandalore during the Clone Wars. After the Great Purge of Mandalore, different groups of Mandalorians were scattered across the galaxy and strived to retain their cultural identity away from their home planet. For the Children of the Watch, this meant returning to ancient traditions - the Way of the Mandalore. Bo-Katan Kryze herself was once a member of the Death Watch, so seeing first-hand what became of them is an emotionally heavy moment for her.
The Mandalorian's season 1 finale revealed that Din Djarin was rescued by the Death Watch as a child, and the reveals in "The Heiress" are another piece of the puzzle. It appears that after the Fall of the Republic, some members of the Death Watch changed tack from trying to take control of all Mandalorian society to establishing their own, purer tribe away from the rest of their people. Din is among the first generation of the Children of the Watch: Mandalorians who have been raised within the tribe, and who have been taught that their way is the only way.
Din was resistant to the idea of there being a different kind of Mandalorian culture, and declined Bo-Katan's offer to join her in trying to take back Mandalore from the remnants of the Empire. It's an understandable reaction; after his own Mandalorian covert was almost completely wiped out by the Imperial remnant, Din Djarin is now one of the few Children of the Watch left to carry on the Way of the Mandalore in the way that he was taught - so don't expect him to start taking his helmet off any time soon. But even if he tries to ignore what he has learned, the knowledge that most Mandalorians are not like him has surely made Din's world feel a little more lonely.