Welcome to the forums. This is a common question. I've taken the answer directly from the CAR. If you haven't seen it yet, be sure the have a look at it
HERE.
If a player draws a tile with a princess, it may be placed according to the usual rules. If
the player uses the tile to extend a city which is already occupied by one or more
knights, the player may remove one knight (big or small) from the city and return
it to its owner.
The word
may implies that it is not necessary, but you have the option to do so.
