WARNING: The following contains spoilers for Episode 4 of The Strongest Sage With The Weakest Crest, "The Strongest Sage Infiltrates," now streaming on Crunchyroll.
In the earlier part of human history, Gaius was a powerful sage with a single crest. His best friend was a talented swordsman named Reuter, and together they encountered a darkness dragon named Iris. Despite being a highly talented magician with enviable combat skills, Gaius was still unhappy with the limited power of his original single crest. To give himself the more powerful four crests, he ended his life to induce his reincarnation. Over 5000 years later, he is reborn as Matthias "Matty" Hildesheimer and regains all the memories of his past life by age 12.
In the present, Matty is training to hone his new powers and skillset at the Second Academy. Although Gaius is revered as a god, no one at the academy suspects Matty's true identity. His expertise in magic and ability to dispatch powerful demons with ease, however, arouses the suspicions of the kingdom's civilians. When he reports the threat of remote spying demons to the kingdom's monarch, Matty is tasked with taking them out at their distant location and is accompanied by his friends Lurie and Alma. In place of using a teleportation spell to get himself to where he needs to be, Matty enlists the help of Iris from his former life -- which is where Episode 4 picks up.
In Episode 4 of The Strongest Sage With The Weakest Crest, Iris safely transports Matty and his friends to the location of the three demons spying on the kingdom. Matty wastes no time in dispatching the first but works with both Lurie and Alma in taking out the second, slightly stronger demon. For the third, Matty chooses to work alone and tricks the demon into overloading his own power, causing him to explode in the process. Lurie and Alma are once again impressed with his ability to kill demons with ease, though they start to question whether Matty is human.
On their way back to the kingdom, Iris asks Matty what she should do once she returns him and his friends to their school. Matty realizes he hadn't thought about that but decides he wants to keep Iris close; not just to keep an eye on her considering she knows his secret, but also as a reliable source of quick transportation to distant locations. He suggests Iris take on a human form and enroll at the Second Academy as a "transfer student." None of Iris, Lurie or Alma think this is a good idea since Iris herself admits she's not familiar with human schooling, having lived as a dragon for over 5000 years.
Despite her reservations, Iris takes up Matty on his offer and uses a spell to give herself a female human appearance. Things are off to a bad start when Lurie and Alma try to cover Matty's eyes to keep him from observing her naked body and Iris fails to understand what the problem is. Once at the academy (fully dressed), the headmaster will only accept Iris as a student after she passes the transfer exam. Matty is confident Iris will pass with flying colors since she's already an experienced user of magic; however, he fails to note that Iris isn't used to human cultural norms -- as evidenced by her strong dislike of human clothing.
On the day of Iris's exam, things are off to an awry start when she is tasked with completing a written exam she doesn't understand. Matty grows nervous, as he doesn't want to look bad in front of the school headmaster, having vouched for Iris to be accepted. It gets worse when Iris takes the practical exam and is shown to not understand "the rules," particularly during the swordsmanship exam in which she defeats her opponent with her bare hand. She later has to knock down targets with magic spells, but ends up nuking the entire training ground in the process.
While Iris is "passed" by the school headmaster on the grounds she didn't technically fail her exams, Iris proves a major risk to Matty's credibility. He ends up taking responsibility for her by repairing the damages she made, but also as a way of staying within the headmaster's good graces. Whether Iris will adjust to her life as a human magic student is unclear, but for now, Matty has a long road ahead of him in The Strongest Sage.