Don Quixote's self-invention as a knight triggers a series of idealistic episodes that constitute the bulk of Miguel de Cervantes's novel.
One episode where Quixote shows his idealism is in rescuing the chained men whom he and Sancho run across. He reasons that it is wrong for their guards...
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to have chained them together and that he should release them. After Quixote and Sancho accomplish this, however, the ungrateful rescued men—who are thieves—steal from them, which even Quixote finds discouraging.
Another instance concerns what has become the iconic phrase associated with quixotic behavior: jousting at windmills. Riding through the countryside and encountering windmills, Quixote declares them to be giants who are oppressing the countryfolk. Determined to free them from this scourge, he rides at the mills with lance extended. The blade of one mill clips him and unseats him. Momentarily bested, he moves on to a new adventure.
Don Quixote himself is the figure of idealism in Don Quixote. He so prefers the world depicted in the courtly romances he reads that he decides to reject the sordid everyday world he knows. He determines to be the change he wants to see. He subsequently fashions himself into a knight and travels around the Spanish countryside idealistically looking for people to protect from danger and harm.
In one instance, he encounters a man beating one of his servants. He intervenes to save the servant, reasoning with his employer to agree not to continue the beating. However, once Don Quixote is out of sight, the man beats the servant even more savagely. In another more famous instance, Don Quixote goes charging at windmills on his horse thinking they are giants. His heart is in the right place, as he is trying to protect people from what he thinks are monsters, but all he ends up doing is hurting himself.
As the above examples show, Cervantes critiques Don Quixote's misplaced idealism. It either backfires or causes harm to Quixote without solving any problems. Cervantes's genius is to show Don Quixote's desire for a more ideal world as appealing while critiquing the misplaced idealism by which he goes about trying to right the world's wrongs.
Don Quixote's character is permeated by idealism. Though strictly speaking, that idealism is solely related to his persona as an errant knight rather than to the real Alonso Quixano underneath. In that sense, idealism is virtually synonymous with madness. But when Don Quixote throws off the mask of the knight, it is surprising just how much common sense and wisdom he appears to possess.
However, as a knight, Don Quixote is a complete idealist (or madman). Arguably the most famous example of this is when the Don charges at windmills, believing them to be ferocious giants. His knightly veneration of courtly love leads him to regard a couple of prostitutes outside an inn as ladies of quality. A similar episode takes place when he treats a couple of common goatherds like gentlemen, his social equals. In both of these examples, the Don's idealism, however deluded it may appear, leads to his connecting with people to whom he normally wouldn't give the time of day. There's a hint of satire here; Don Quixote's idealism sheds a revealing light on the conventional relations between different classes at that time in Spanish society.