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Book 1, Part 1-Book 1, Part 2

Book 1, Part 1: Cervantes begins by describing his main character of his novel-Don Quixote (though he's initially known as Quixana) of the village called La Mancha.  Though he lives with his extended family, he has no wife or children, despite his age of fifty years.  Cervantes soon explains that of late, Quixote has spent most of his time reading books of chivalry.  In fact, due to this obsession, he grows delusional, even beginning to model himself after the knights described in the books. Cervantes describes Quixote's insanity, saying, "he so immersed himself in those romances that he spent whole days and nights over his books; and thus with little sleeping and much reading his brains dried up to such a degree that he lost the use of his reason."
Finally deciding to venture outside of La Mancha himself to engage in the activities of the aforementioned knights, Quixote flimsily reconstructs the armor of his great-grandfather which has now become old and rusty.  He names his horse Rozinante, meaning "first of all hacks." Here he begins calling himself Don Quixote de La Mancha, signifying his ancestry and his village.  Now needing only a noble lady to call his own, he decides to make a "good-looking country lass," Aldonza Lorenzo, his esteemed princess, in the tradition of knights-errant, giving her the title, Dulcinea del Toboso.
Book 1, Part 2: Cervantes, in his next chapter, provides the Don's justification for such a seemingly aimless journey, saying of his protagonist, "he was spurred on by the conviction that the world needed his immediate presence.." Soon he sets out on horseback, knowing that he still hasn't officially been dubbed a knight.  Yet "his madness prevailed over his reason," and he decides that the next person he comes across will have to do him the honor. 
As Rozinante leads him, he imitates the accounts he's read about in his books, speaking to himself about how history will remember him.  Soon he encounters an inn where he decides to spend the night.  Approaching the inn, he sees two prostitutes near the entrance, though he believes them to be distinguished ladies standing outside a castle.  Thinking that he has come as an honored guest, Quixote enters, still yearning to be dubbed a knight.