Far East is a geographical location which contains Jerusalem and the holy lands. Galahad believed that he would find the Holy Grail there.
There are many mushroom cults in the Far East.
The Far East stretches from Egypt to Gaza to Jerusalem to China and India and parts of Russia.
Worship of Christ god arose in the Far East around 100 A.D and spread to the west since then. Islam is a religion practiced in the Far East as well.
Behind the scenes[]
In some historical colloquial usage Far East and Orient (meaning east) are interchangeable meaning roughly "exotic", and sometimes Egypt and other middle eastern countries categorized under such terms.
Although this usage is more of a colonial/imperial era usage from 1800s to early 20th century. The term Middle East appears to date only to the 1850s in the British India Office. Likewise "Near East" is a more recent term. However Far East goes back at least to the 1500s. So taking that into consideration Merlin's usage is more accurate; Merlin talks about Far East when asked about Christ or Jerusalem; he also says that the scroll "in Aramaic" in his room comes from the "Far East".
It might be assumed that term 'Far East' refers to 'known lands in the east' (from the 'western perspective') at the King Arthur's reign (meaning that knowledge only extends as far as the Middle East and known Asia), Merlin also knows of places as far away as India and China. However, knowing of them doesn't mean he knows their exact locations in relation to others. But it may be the limit of the knowledge of the east as far as the Guard or the Harbourmaster know. Also note that the game anachronistically distinguishes the 'holy lands' as being located in the Middle East in maps.
In modern usage the term "Far East" refers to the eastern side of Asia and includes China and Japan. In modern usage the mushroom cults were actually located in the "Near East"[1].
In Conquests 2 'The East' is used to refer to a land to farthest east, where the silk of wyrms is woven by dark-eyed maidens.