The Forge is where the Blacksmith works away to produce weapons, and to repair damaged equipment (a common occurrence in the Tourney). Merchants with fine weapons also often gather here to try and sell their wares to the Knights. The Smith also acts as a Farrier and looks after the horses, so a Knight without a mount can get one here.
You can visit the Forge to buy equipment from the Smith. You can own any amount of equipment. The Equipment you can buy is as follows
Equipment can become damaged in combat. Damaged Equipment can be repaired by the Smith for half of the cost to buy it. Of course Horses don't get damaged or repaired.
It a sad truth that sometimes Knights fall on hard times and need to sell items for money. Knights may also acquire equipment by capturing it in the Melee. If a Knight needs to sell Equipment, the Smith will buy it at half its initial value if it is undamaged, and one quarter the value (rounding down) if it is damaged.