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At the point in the story that you are talking about, Edward is in the process of trying to escape the thieves. He runs into the woods to try to get away and comes across a hermit. That would normally be okay, except that this hermit is not one of the fairytale nice-guy hermits. He's actually crazy and quite sadistic. He has been driven crazy by Henry VIII, Edward's dad.
So while Edward is sleeping, the hermit ties him up and gags him so that Edward can neither scream nor run away.
Chapter 21 starts with Edward waking up and realizing that he has been tied and gagged. That would be scary. Add to that the hermit is holding a really big knife over Edward and is planning to kill him. If that doesn't scare someone, nothing will.
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