This is a quote from a memoir by Dorothy Wordsworth, reflecting on a trip she took with two famous poets, her brother, William Wordsworth, and their similarly gifted companion, Samuel Taylor Coleridge.
We sat upon a bench, placed for the sake of one of these views, whence we looked down upon the waterfall, and over the open country ... A lady and gentleman, more expeditious tourists than ourselves, came to the spot; they left us at the seat, and we found them again at another station above the Falls. Coleridge, who is always good-natured enough to enter into conversation with anybody whom he meets in his way, began to talk with the gentleman, who observed that it was a majestic waterfall. Coleridge was delighted with the accuracy of the epithet, particularly as he had been settling in his own mind the precise meaning of the words grand, majestic, sublime, etc., and had discussed the subject with William at some length the day before. “Yes, sir,” says Coleridge, “it is a majestic waterfall.” “Sublime and beautiful,” replied his friend. Poor Coleridge could make no answer, and, not very desirous to continue the conversation, came to us and related the story, laughing heartily.
Now: what is the point of this story? what is it that bothered and/or amused Coleridge about his new friend's second remark?
The problem, if I understand it, is that the anonymous fellow used the terms "sublime" and "beautiful" as if they were synonyms. To the Romantics, especially the more lettered of them (those who would be reading Kant on aesthetics for example) "sublime," like "majestic," could very well refer to a waterfall. But "beautiful"? That was a very different category, intended for smaller sorts of things. "Beautiful" as they understood the term has more in common with "pretty" than with "sublime."
I can't say I agree with the memoirist that the incident reflects Coleridge's good nature, though.