In this particular instance, the narrator calls Mr. Chips a legend because as an air-raid is going on near the school during World War I, Mr. Chips calmly continues his Latin lesson. As the narrator explains, Mr. Chips thinks they are just as safe in the classroom on the schoolhouse's ground floor as anywhere else, even if shrapnel is falling all around them. And while the students are frightened or distracted, Mr. Chips remains unflappable:

So he went on with his Latin, speaking a little louder amid the reverberating crashes of the guns and the shrill whine of anti-aircraft shells. Some of the boys were nervous; few were able to be attentive. He said, gently: "It may possibly seem to you, Robertson—at this particular moment in the world's history—umph—that the affairs of Caesar in Gaul some two thousand years ago—are— umph—of somewhat secondary importance— . . . But believe me—umph—my dear Robertson—that is not really the case."

In part, Mr. Chips is a legend due to this story because the story gets more and more embellished as it is retold, and becomes half fact, half fiction, just as a legend does.

It is also a legend because it exemplifies what Mr. Chips is to the school, a fixture who never changes. At this point he is old, and even a war can't compel him to change his ways. He represents a safe, Victorian world.

Mr. Chips was a master at Brookfield for well over half a century. During that time, the school underwent many profound changes, as indeed did the world outside. Yet throughout it all, one permanent fixture remained: Mr. Chips himself. Chips is a legendary figure because, uniquely, he connects Brookfield's present to its past. As with many legends, all kinds of stories and anecdotes—some of them true, some of them apocryphal—have attached to his name.

Thanks to Chips's kindliness and good humor, he remains deeply popular among both boys and teachers alike throughout his time at the school and beyond. However, the new headmaster Ralston regards him as a bit of a dinosaur, rather a stick in the mud for his unwillingness to embrace the radical changes he's introduced to Brookfield. Yet this is very much a minority opinion. On the whole, the student body and the faculty value Chips enormously for sticking to his guns. In fact, it merely adds to his legendary status as a timeless reminder of what Brookfield's values ought to be.