The kids are playing some kind of RPG that Ezra is making up. (I can tell it’s an RPG because there is a lot more discussion of the rules than there is actual playing.)

Ezra: “OK, now you have to choose if you want to fight this guy.”
Phineas: “Yeah, I do. Wait, what’s his name again?”
Ezra: “Umm. I forget. It doesn’t matter anyway: you defeat him!”

(Example of rules: “Because he’s made of fire, if a character attacks down while he’s already attacked then it makes a spike of fire. No, not the cow – no it has to be a player. No, you have to attack down or it doesn’t work. Why are you setting your cow on fire? Oh, come back here. Zzzzzzzzzt! You’re supposed to be paying attention. Come on, you’re not even on the playing board!”)