Question: I never understand why the bully backs off from Jack suddenly once he thinks Jack has a steel plate in his head from Vietnam. What does a steel plate in the head mean and how did it fend off the bully?
Answer: Jack is saying that part of his skull has been replaced with a metal prosthetic, due to having been wounded in Vietnam. The bully now sees Jack as a wounded veteran who could suffer severe health problems if punched.
Answer: Jack never said he had a steel plate in his head... Janet told that to the bartender who in turn questioned Jack about it.