"What would you do, in my place?" Arthur asks the man in front of him. He keeps prodding, trying to get an answer out of him. He's not blind, he sees Merlin's distress and he understands but at the same time he doesn't. He's offering Merlin the chance to not only tell him the truth, but to take a stand for his own kind. Why doesn't he take it?
"You must protect Camelot and you must protect the world you spent your life building. A just and fair kingdom for all." Merlin tells him.
"You'd have me sacrifice a friend?" Arthur hopes that the double meaning is not lost on Merlin, he hopes that the young man will understand what he's asking. He hopes that Merlin, his friend, will realise that he's free to reveal his secret.
"There can be no place for sorcery in Camelot"
Arthur knows that Merlin isn't going to take those words back. If the tears in Merlin's eyes are something to judge from, it must've taken a lot for him to betray his own kind. Arthur has known for quite a while that whenever Merlin does give advice, he's got good reason to. He sees things Arthur can't. So Arthur takes his advice, and hopes that there will be a day when Merlin trusts him enough to be honest with him.