Who is the narrator, can she or he read minds, and, more importantly, can we trust her or him?
First Person Central Narrator
What we get in The Crystal Cave is Merlin's own, first-person account of his adventures. Mary Stewart uses two types of "I" in this work. The first is used by Merlin the old man, the dude who is telling the story from memory in the present. This first-person narrator usually comes into play when Merlin wants to talk about remembering:
[…] I feel as if I could walk into them, and that if I had the strength to concentrate, and the power that once fitted me like my robe, I might even now rebuild them here in the dark as I rebuilt the Giants' Dance for Ambrosius, all those years ago. (III.1.2)
And then there's the first-person narrator who moves and acts inside the story—Merlin of the past. Pick almost any page in this book and you'll see this guy in action: "I froze still, straining my eyes to see. There was no movement. I held my breath, listening" (I.5.3).
Note that whenever the old Merlin makes an appearance and starts chatting about how unsure he is about the accuracy of his memory, we as readers are like, "Dang, Merlin. Why should we believe you?" And that's the difficulty of first-person narration: we might be dealing with an unreliable narrator. Check out this level of hedging, for example:
[…] sometimes now as I search my memory I wonder if here and there I have confused them one with another, Belasius with Galapas, Cadal with Cerdic, the Breton officer whose name I forget now with my grandfather's captain in Maridunum who once tried to make me into the kind of swordsman that he thought even a bastard prince should be. (III.1.3)
Merlin's lack of confidence in his memory—the thing this entire story is based on—makes us step back and wonder whether everything he's leading us to believe is completely true or correct. But that's kind of the point. The Arthurian legends are just that—legends. There must be some historical truth to them, but where is that truth? It's impossible to say. But that's half the fun.