A simplified version of the Western European feudal system starts with the King at the top, followed by nobles/lords that would own large swaths of land throughout the country. Underneath the nobles/lords were the knights, and below them the peasants. The feudal system worked through a series of exchanges.
Kings received loyalty from their nobles, protection from the knights, and food/services from the peasants. They gave land to the lords, which they could rule as manors with employable knights and peasants in the surrounding countrysides.
Lords/nobles received land from the king, loyalty and protection from the knights, and food from the peasants. They gave smaller plots of land to the knights.
Knights received small plots of land inside the lord's realm, and gave loyalty and protection to the lord.
Peasants received protection and shelter. They gave services, including maids' work, the growing of crops, and the care of the animals.
The knights in this system were still considered part of the elite, but were on the lowest end. Knights were usually born into noble families. The land that the nobles gave the knights was usually tended to by the peasants, and in return, knights would protect the manor (or entire realm) when needed.