Lloyd revealed Melbu Frahma's plans to the party here, in a cave where they could rest. Rose objected to his assertion that the Moon Child would bring peace to the world, but she would not elaborate. The truth would only be revealed later.
To acquire the Dancer's Ring and Magic Shield one must slide down the cliff and hit the appropriate action icons to stop themselves in front of the chests. To get to the chest with the Dancer's Ring, you should slide down to the left side (character's left as he's facing the cliff edge) of the warning sign and press the X-button at the second and fourth Action Icons. For the Magic Shield, you slide down the right side (character's right as he's facing the cliff edge) of the warning sign and press the X-button at the first, third & fourth Action Icons.