Despite being two great tastes etc., this chapter's themes are not particularly unified. The first is genre-specific combat modifications, and the second is rules for drunkenness, and there's no particular cross-over. They could easily have been two very short chapters to no loss.
Fighting
I've already mentioned Courage, which is part of the method of making fights to the collapse or flee rather than to the death. It seems likely that in the original Goblins game the characters had only Courage and not hit points or similar, and keeping track of both is a bit of a pain. I like the results of having both physical and morale hit points, but the process could stand some streamlining. One thing which is kind of bullshit is that a particularly bad morale failure means shitting yourself in an especially humiliating way and just cold taking an additional -15 in social disads assigned by the MC; that's harsh and bad for the game, although it is an excellent motivation to start running before that result is even possible (you have to be significantly in the red on Courage before that happens), and I guess it's comparable to getting fucked up physically which can easily land you -15 points in physical disads.
You may have noticed in the chargen example that Wall Stabbington ended up with a couple of points of Menace. Well, some people and weapons are especially frightening and knock points off the opposition's Courage just by being visible when a fight starts, and Menace is the number that tells you how much they knock off. A bottle gets two points scarier if you break it to create a jagged end, so you are motivated to do that before any whacking is declared (or declare whacking before the enemy breaks theirs).
There's a small treatment on socially-appropriate weapons, with the lower classes using whatever gruesome implements are handy, the gentlefolk using actual pistols and swords, and the aristos using hired goons. Guns get their own new rule, where instead of being handled with the ordinary attack/defense procedure, a gunshot is a quick contest between the shooter's Gun skill and the target's Theology skill, which is funny as a concept but has some strange implications, like why the understanding of religion is so twisted if so many people are motivated to learn actual theology.
Drinking
The expanded GURPS drunkenness rules were originally laid out in GURPS Callahan's Crosstime Saloon, which oh man, I'm not even. They are essentially the same here, and the granularity is high, with 14 levels of intoxication and associated bonuses and penalties, but it's mostly manageable. The attention paid is probably appropriate considering that (as you may have noticed from the chargen example) Goblins are racially alcoholic. The only real connections between fighting and drinking are: 1) a Goblin's Courage is increased by their intoxication level, and 2) a Goblin who loses a fight doesn't get their Courage back until they've had a drink (victorious Goblins get all their Courage back immediately).
Rules for how bad your hangover is finish up the chapter.
Next up: DISEASE.