There are many interpreations of this poem. I was taught that it was about a clash between Christianity and Paganism. Sir Gawain, of course, represents Christianity, while the Green Knight represents the old beliefs.
Gawaiun accepts the Green Knight's challenge, and is praised for his bravery. When he gets to the GK's palace, however, the GK's wife seduces him which is symbolic of the perils of temptation. By accepting the wife's favors, as well as the offer of use of the magical talisman, Gawain is showing that his own faith is not as deep as he's advertised, . The Green Knight's expose of Gawain's weakness is proof that the old beliefs will continue, despite the seeming-victory of Christianity.
In the end, Gawain goes home humiliated, knowing that he has failed his god by hoping to win via the magical girdle rather than his own prowess in arms, and his faith in God. He must reexamine his own place in the world, and whether he really deserves to be in the company of his fellow knights.
It's a very telling drama, and a story of human weakness and human frailty.
