Polonius is ecstatic to believe he has the answer to Hamlet's so-called lunacy and rushes to the King and Queen with his discovery. He has read the love letters Hamlet has sent to his daughter and has heard from her about his strange appearance, partially clothed, in her room.
Polonius interprets these words and actions as his deep love for Ophelia. Because Polonius has prohibited his daughter from seeing or speaking with Hamlet, he assumes she has followed his direction and spurned the young man.
He hopes that this discovery will earn him favor with the King and Queen, as that is what he most seeks. This results in the infamous "set-up" in which the King and Polonius stage a meeting between the two teens and spy on the interchange with disastrous results.