As pps have said, it was a conversation which Harry reported to Meghan (who hadn't been present). which was the basis of the racism claims made to Oprah Winfrey. Meghan must have thought all her birthdays and Christmases had come at once! What a gift. Harry was either stupid or mischief-making to report it to her because however innocent it was, it was clearly just what she was waiting for.
I hadn't realised, but someone pointed out to me on MN that of course, it's Meghan who tells Oprah about this conversation. Harry isn't on camera at the time. The poster believed that Harry wasn't present and didn't actually know what Meghan had said until later. I'm not sure about this - I just assumed that H would be sitting off-camera, but I can see their point: why would he not appear if that were the case? Perhaps he wasn't present and didn't know she was going to say/or had said, what she did. I don't say this to absolve Harry in any way, merely to give another example of his poor judgement.
Another poster (was it you, Randy - I can't remember who to credit!) also suggested that, during a cut to Oprah's face, Meghan mouthed the relevant name to her. If so, that's awful.
If it was all fiction, people would say it was too sensational. And they wonder 'why we're interested in these people we don't even know'!!!🙄