She says that nothing bad actually happened, and that she's still fine, but that still doesn't keep him from being worried. There's probably no point in continuing to harp on it now? He'll just need to be more careful and pay more attention next time. (The lingering doubts and concerns don't go away, though.)
He's a little sad about her desire to not call him her Lord when not actually magically his, but then when she says she might want to switch to something else in the meantime...
"I, um, 'sir' is the um, standard, I think?" he says, glancing down at his entirely unclothed and unhideable crotch and then immediately anywhere else, like a far corner of the room. "At least in stories. And other things. There are, um, other words, um..." he doesn't want to say it (though she's probably going to get it out of him anyways isn't she) "but it doesn't really work right now for the same reason Lord doesn't?" True enough. "Sir should be fine."