The Invading Marauders
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During hard times in Japan, invading armies could quickly sweep into any of the small towns and take control. In one particular village, everyone fled just before a particularly vicious band of roaming marauders arrived - everyone except the Zen master. Curious about this old fellow, the general went to the temple to see for himself what kind of man this master was. When he wasn't treated with the deference and submissiveness to which he was accustomed, the general burst into anger. "You fool," he shouted as he reached for his sword, "don't you realize you are standing before a man who is able to run you through without blinking an eye?!" But despite the threat, the master seemed unmoved. "And do you realize," the master replied calmly, "that you are standing before a man who is able to be run through without blinking an eye?"
This zen story, I feel, is best left open ended. There are versions where different things happen at the end, but with those versions you run a greater risk of missing the point. I think zen stories frequently try to re-arrange your perceptions and make you look at things from a different angle. Think about the story, but don't think too much.
What is the point? Well, there can be a few interpretations.
Personally I think the focus is on the fact that the physical world doesn't really matter. Descartes well known "evil deceiver" philosophy relates to this concept. How do you know what you see and feel is really there? You don't. Also, the future is unknown. People often assume that they know what the outcome of a scenario will be, but you never know for sure.
The story may also be trying to relate a message about death. Death is coming for us all. There is no way to avoid it, and there is no reason to fear the unknown.
Cletus the Foetus put it simply and effectively when he said the story conveyed "the power of spiritual independence and self-sufficiency".
Now that you have thought about it a little, I suppose there is no harming in explaining that many versions of the story have the General so shocked, he just turns and leaves the zen master alone.
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