Sentence:  A "<WSD>pencel</WSD>" is a small banner usually assigned to squires,...But "Launfal's" characteristically ingenious use of the <WSD>pencel</WSD> makes it an object that participates in two distinct systems of registration: the fine, small object that is the sign of amorous devotion in a chivalric context and the somewhat ambiguous index of armigerous status. 
Meaning of the word marked with <WSD> tags:  A small pennon. (from 13th c.)