I always assumed it was just a memory and nothing was actually being explained in the present

Yeah, agreed, I don't think he explains anything in the present, just reveals his scar, which (to him) is explanation enough.

(How much does Shen Wei apparently accepting that as an explanation mean? Hm. It doesn't mean he has to remember things the same way; I think it's enough if he also remembers causing that scar, because Zhu Jiu is presenting the scar as a symbol of his hatred. That connection needs to be real, at least.)