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The original true king of Muspelheim wasn't backing down, Ignisefer overflowed with blazing wrath, unleashing his true power as his appearance suddenly changed, triggered after Surtr pushed him more than he could have ever believed possible for a small "fly" like him!
Realizing that his opponent was a powerful Fire Dragon, the beings that once dominated Muspelheim and which were both his friends and deadly rivals, Ignisefer smiled, realizing that this opponent wasn't someone he could take lightly.
In a way, despite how overwhelmingly powerful he suddenly became, the beast was recognizing Surtr's strength by unleashing this powerful transformation, from a King to a King, this was a battle that meant more than just rivalry, it meant something more mystical to the beast.