S’était

On parle d’une action qui s’est produite dans le passé, sans rapporter de faits apparentés.

Ils se rappelaient de la première fois qu’ils s’étaient parlés.

S’est

On parle de ce qui se produit également dans le passé, mais en rapportant les événements qui se sont produits, dans le même contexte.

La première fois qu’ils se sont parlés, la gêne était palpable.

The difference is exactly the same as in English : it is a matter of sequence of tenses. If you are narrating something, using a past tense, and you want to indicate that an action took place before the rest of your narrative, you need to use pluperfect. If it took place at the same time as, or in sequence with, the rest of your narrative, you’ll use either present perfect (in French, most cases) or simple past (in French, literature only). In English, you’d use simple past and not present perfect, but the role of the pluperfect remains the same : it’s a "past-in-the-past" tense.

S’est means that mistaking the sword for a real one took place in sequence with the rest of the narrative, s’était means it took place before all the rest.

For a clearer example :

Je suis allé chercher du pain, et quand je suis rentré je me suis aperçu que j’avais oublié mes clés.

I went to buy bread, and when I came home I realised I had forgotten my keys.

Going for bread, coming home and realising are a sequence of actions, so all these verbs use the same past tense. Forgetting your keys took place before this sequence, so you need to use the "past-in-the-past" / pluperfect tense.

It’s the pluperfect tense.

The pluperfect is in this sequence.

Subject + Imperfect + Passe Compose

Elles m’en avaient bu beaucoup avant qu’elles m’aient emmenené au match football.

It’s just conjugated into the pluperfect tense. The pluperfect is basically, an action that had happened already in the past (Je t’avais vu quand t’as arrivé ici)

I do agree with the above, it’s all about the sequencing of the events. Saying that you had not realized before the rest of the events, or during the same sequence.

that will depend on the answer to the following question:

“When didn’t they realise?”

If the answer is back then when they were kids, then you should use “s’était”.
If the answer is when they remembered it, then you should use “s’est”.

Hope that helps.