Although the film's two most important characters are both mad, the hero more than the villain, we're not quite certain what is intended by that final dialogue. Part of the puzzle is caused by the film's shifting points of view.
Most war movies are either for or against their wars.
The film is set in 1943, in a POW camp in Burma, along the route of a rail line the Japanese were building between Malaysia and Rangoon. Nicholson and Saito, the commandant, are quickly involved in a faceoff. Saito wants all of the British to work on the bridge. Nicholson says the Geneva Convention states officers may not be forced to perform manual labor. He even produces a copy of the document, which Saito uses to whip him across the face, drawing blood.