Theory:

The story of Taro and his magic waterfall reached the Emperor of Japan. He sent for the young woodcutter, and rewarded him with twenty pieces of gold for having been so good and kind. Then he named the most beautiful fountain in the city after Taro. This, said the Emperor, was to encourage all children to honour and obey their parents.
Explanation:

Everyone realized the truth behind the sake and the magic waterfall. Eventually, the story reached the Emperor of Japan.

The Emperor of Japan

The Emperor became interested and asked Taro to come and meet him. He rewarded Taro with $$20$$ pieces of gold.

Gold coins given to Taro as a reward

The reward was due to Taro's kind heart and good behaviour. Finally, he also gave the waterfall a new name. He named the most beautiful fountain after Taro. The Emperor said that this was to encourage all children to honour and obey their parents.

The beautiful waterfall is given Taro's name.

Meanings of difficult words:

 Sl. No. Words Meanings 1 Emperor King; ruler; monarch. 2 Sent for Called 3 Rewarded Gave prize. 4 Pieces of gold Gold coins. 5 Fountain A small waterfall. 6 Naming fountain after Taro Giving the fountain the name of Taro. Naming someone after someone means to give them the same name. It is known as eponymous. 7 Encourage Give support, confidence, or hope to (someone). 8 Honour Respect.
Reference:
National Council of Educational Research and Training (2006). Honeysuckle. Taro’s Reward (pp. 29-34). Published at the Publication Division by the Secretary, National Council of Educational Research and Training, Sri Aurobindo Marg, New Delhi.