Don Quixote tells his friends that, weary of hanging from the rope, he took rest on a spacious ledge about sixty feet down. Sleep overcame him, and he awoke to discover himself in the midst of a beautiful sun-flooded meadow. Before him stood a "royal and sumptuous palace" built of transparent crystal whose guardian is none other than Montesinos himself. Greeting Don Quixote by name, the old man told him that the enchanted knights and ladies who live here have long awaited his arrival. Montesinos showed him the still-living Durandarte, a knight whose dying wish was for Montesinos to deliver his heart as a present to his mistress Belerma. Belerma herself, with her waiting women, also passed before Don Quixote's eyes. More surprising, however, were the presence of the three country wenches, mounted on she-asses, who again ran away as the knight approached. One of them returned, begging Don Quixote to lend her six reals, for her mistress, Dulcinea, required money. At this amazing request, the knight gave her all he had, about four reals.
While the narrative continues, Sancho constantly interrupts. Impertinently refusing to believe what his master says, he suggests that this all took place in his head. Unruffled, Don Quixote says that there will come a time to prove to him of the reality of what he has seen, "the truth of which admits of no dispute."
Montesinos, a historic character, is a knight who figures in a number of Spanish ballads dealing with Carolingian legends. He is described as having followed the bloody trail of his friend and cousin, the knight Durandarte, after the battle at Roncesvalles. When Montesinos finds his friend, Durandarte's last breath is expelled in asking that his heart be cut out and carried to his lady Belerma, whom he served for seven years; Montesinos fulfils this request. This extravagant story achieved great popularity and was later turned into a parody by Gongora. Actually, a cave in La Mancha nearby a ruined castle was known as Montesinos' Cave, and it is hardly more fitting than to have Don Quixote descend into this gorge.
In this underworld dream sequence, Don Quixote allows himself to express qualities of common sense and prosaic reasonableness which are parts of his inner consciousness. He questions Montesinos, first of all, to confirm some parts of the ballad. The old man corrects certain details. It was with a sharp poniard, not a dagger, he says, that he cut out the heart of Durandarte. Don Quixote also inquires why the supposedly beautiful Belerma has such yellow skin, as well as other blemishes. In another part of the dream, one of the wenches returns to the knight to ask for some money for Dulcinea. Cervantes' gentle suggestion, or Don Quixote's subconscious cynicism, is a quiet insinuation that beautiful ladies of Madrid and Seville must often be in the habit of asking money from their elderly gallants. Perhaps in this dreamy moment of truth, Don Quixote expresses his skepticism that a young girl like Dulcinea would only reply to his advances for mercenary reasons. Thus, in a situation completely freed of reality, Don Quixote reveals his subconscious Alonso Quixano qualities: matter-of-factness, prosaic interest in concrete details, vulgarization of his relation to Aldonza-Dulcinea. To continue even further, perhaps this inherent dullness in the brave hidalgo's character was in itself an impetus that led to his extravagant life of fantasy and escapism.
Cervantes, however, knew nothing of psychoanalysis, but it can be argued that his love of innuendo and double meanings and his general traits of suggestiveness and vagueness led him into working his materials into as many levels as possible.