Freddie competes in the national spelling bee, and wins but is disqualified when he is accused of cheating, when a tape shows Frasier mouthing the words to Freddie's final word.
Both Frasier and Freddie attend the banquet anyway, but Freddie plans on getting even when he punches the kid who ended up getting the trophy, in the mouth.
So after receiving one too many insults Freddie challenges Warren to a spell of in the parking lot.
Niles even tells a tale of what an excellent speller he is, and that he chocked at the national spelling bee once.
The episode shows that cheaters never win, epically when the cheaters are really the losers just sore ones.