Hi it's me again and sorry I have to make this brief...

I'm attacked by multiple characters in a military challenge. One attacker's text reads: defenders with lower power on them my not defend against this character.

Does that mean I may only defend with the one character that meets that prerequisite?

You may declare any character that has equal or more power on him than Ser Eldon Estermont (the attacking character in question, I presume). If you have only one character that meets this requirement, then that character is the only one you can declare as a defender.

There are some card effects that let you put characters into a challenge as defenders, which would bypass this requirement (because they bypass the "declare defenders" part of the challenge), though at the moment I can't think of a Baratheon card that let's you do this. Also, if Ser Eldon was blanked somehow before you declare defenders, his ability would not apply, obviously.

Ser Folly said:

While Ser Eldon Estermont is attacking, characters with fewer power than him cannot be declared as defenders.

I'm not sure what the confusion is about here. If a character doesn't meet the conditions, it cannot be declared as a defender. If you have no characters that meet the condition, you cannot declare defenders. It's no different than the KotSea Balon (who says characters with lower STR cannot be declared as defenders), or Wex Pyke (who says characters without crests cannot be declared as defenders) or the plot Herding the Masses (which says non-unique characters cannot be declared as defenders).