The Nobility Contest is a regular event that happens all the time. The tent for it (like other events) will be outside your castle. King Ludwig the Round gives you an objective, which sometimes corresponds with Foreign Lords, Samurai, etc. When you earn points (by completing goals), your bar on the bottom is going higher, towards rewards. Once you reach the specified amount, you receive the reward (coins, decorative items, or special soldiers). There is usually a prize for Top 20 (top 5 for Shady Lady targets) and Winner of the contest.