As a result of Hamlet's own words and behavior, Polonius tells Claudius and Gertrude, "your noble son is mad" (2.2.93). Polonius has ordered his daughter, Ophelia, to have no more contact with her former lover, Hamlet, because he believed that Hamlet was not actually in love with her, and, even if he were, he would not be at liberty to marry her as he is a prince and she a commoner. Ophelia showed her father a letter from Hamlet where he vows to love her "best, oh, most best, believe it" despite her recent avoidance of him (2.2.121-122). Therefore, Polonius has come to the conclusion that Hamlet does actually love Ophelia, and he thinks that Hamlet believes that his love for Ophelia is unrequited—that she does not return his feelings since she has refused to see him or accept any tokens from him (at her father's direction)—and that this has driven Hamlet mad. As a way of verifying Polonius's conclusion, he and Claudius concoct a plan to thrust Hamlet and Ophelia together and secretly observe the interaction.

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.