After the Star Wars franchise recently got a major extension in the form of numerous upcoming series and the fact that The Mandalorian has already been greenlighted for a third season, it was obvious that its Season 2 finale would be used to set up more future plotlines. One such brand new development comes in the form of updating the Darksaber's mythology. While it ends up retconning its history in Star Wars: Clone Wars and Star Wars Rebels, it may have just explained the real reason Bo-Katan lost in the Great Purge.
[The article contains spoilers for The Mandalorian Season 2 finale "The Rescue." In case you haven't watched it yet, this would be the place to stop reading]
Oh, so you are still here? Then let's proceed first with straightening out the Darksaber's history in the Star Wars's universe up until now.
The Darksaber's presence during the Clone wars.
The Darksaber was created by Tarre Vizsla, the first Mandalorian who became a part of the Jedi Order. He soon became the ruler of Mandalore and when he passed away, the ancient weapon was safely stored in the Jedi Temple. But it was stolen by members of Clan Vizsla and was passed down from one generation to another, which brought it into the possession of Pre Vizsla, the leader of the Death Watch, during the Clone Wars.
He joined hands with Sith Lord Maul and used the weapon to defeat Duchess Satine Kryze to take over Mandalore. But Maul betrayed him- he challenged Vizsla to a duel which brought an end to Vizsla's life and thus his rule, making the Sith Lord the ruler of Mandalore and the owner of the Darksaber.
After using the weapon in several battles and to fend off many attacks, Maul had no use for it and it ended up in the Nightsisters of Dathomir's possession. After a "skirmish on Dathomir," the rebel and Mandalorian warrior Sabine Wren took the Darksaber during the Imperial era and began her training under Jedi Knight Kanan Jarrus as she continued her fight against the Empire. After she led Mandalore in the Civil war, she offered the Darksaber to Bo-Katan Kryze whom she deemed as the perfect leader to unite and lead the Mandalorians against the Empire. Though initially reluctant, Bo-Katan accepted the Darksaber and successfully reunited the clans to launch the Mandalorian resistance in an attempt tp completely liberate Mandalore from the clutches of the Galactic Empire.
But during the Great Purge, Mandalore was destroyed and she lost the weapon in the battle. After the Darksaber's appearance in The Mandalorian Season 1, it was confirmed that it ended up in Gideon's hands who was present during the Purge.
So, basically the Darksaber has had many owners and it wasn't always a duel that decided who gets to wield it. In fact, it has mostly been passed down from one generation to another in the Vizsla clan and even Bo-Katan was given the Darksaber by Sabine Wren.
But The Mandalorian finale Season 2 retcons this particular plotline.
After trying and failing to slice Mando in half with the Darksaber, Moff Gideon was dragged to Bo-Katan by the bounty hunter. But the leader of the Nite Owls was not at all happy on seeing her enemy caught as she eyed the glowing weapon in Mando's hand, which is a symbol of leadership for her. This is where Moff Gideon discloses how Mando can't just give Bo-Katan the Darksaber- she has to win it fair and square in a duel or else it would be of no use to her. Seeing as Mando is the one who ends up battling and defeating Gideon, he is now the ruler of Mandalore and the rightful owner of the Darksaber.
So, now the Darksaber suddenly has a Harry Potter's Elder Wand-like clause which deems it necessary for Bo-Katan to defeat Mando to become the legitimate wielder of the Darksaber. While it basically turns the history of the ancient weapon on its head, it does explain another (Rebels}' plotline.
The real reason Bo-Katan lost in the Great Purge.
Going by the Elder Wand logic, the Darksaber has to be actually won in a duel or else it won't work to its maximum power levels or can even malfunction. As Bo-Katan didn't really win the weapon- it was merely given to her by Sabine Wren- it didn't really become an extra advantage for her in the fight and could have even hindered her, factoring in her inability to stop the merciless decimation of Mandalore.
Maybe that's why Bo-Katan looks so tempted by the idea of actually winning the Darksaber and owning it the right way this time in order to become the true leader of Mandalore- she already knows that just taking the weapon doesn't work. This will, undoubtedly, create friction between the two Mandalorians in the future. But whether or not it will completely ruin the chances of a strong alliance between the two will only be confirmed in future episodes. The latest and final episode of The Mandalorian Season 2 is now streaming on the official Disney+ app.