Don Quixote leaves his comfortable home to pursue a great romantic dream. He has lost touch with reality and fallen under the illusion that he is, in fact, a knight-errant of bygone days. His romantic dream is to right the wrongs in the world, protect the defenseless, and act with courage and honor as he faces danger and adversity.
In his adventures, Quixote does not recognize ordinary people and situations for what they are. At various times, he believes that windmills are giants, that herds of sheep are armies, and that a woman traveling to Seville to meet her husband is a princess being held captive by "certain enchanters," who are simply two priests who happen to be traveling on the same road. In each instance, reality asserts itself, but Don Quixote explains it away by various means and maintains his world of illusion.
His romantic dream is finally destroyed, however, when he loses in his battle with the Knight of the White Moon, an opponent who is really his friend Carrasco from Quixote's village:
Being mounted upon the swifter horse, the Knight of the White Moon met Don Quixote two-thirds of the way and with such tremendous force that, without touching his opponent with his lance . . . he brought both Rocinante [Quixote's horse] and his rider to the ground in an exceedingly perilous fall.
After this loss, Quixote is honor-bound to give up his life as a knight-errant and return to his village. Sancho Panza observes the effect this turn of events has on Don Quixote:
He saw his master surrender, heard him consent not to take up arms again for a year to come as the light of his glorious exploits faded into darkness.
Don Quixote is carried home in a litter born by his friends, his body battered, his faithful horse too injured to even stand, and his romantic dream finally destroyed by a reality he could not overcome.
Once he is returned home, Don Quixote still clings to his identity as a knight-errant until he awakens one morning, miraculously restored to sanity:
I am no longer Don Quixote de la Mancha but Alonso Quijano, whose mode of life won for him the name of "Good" . . . I am in my right senses now . . . .
Don Quixote is no more, and his great romantic dream will not live again.