Sancho Panza is Don Quixote's squire: a poor farmer from the village, "a good man, if such a title can be given to a poor man, though not overly bright," who leaves his house and his wife to serve the gentleman for a promise, that of becoming governor of an insula.
In Part One, he is the measure of the real. Where his master sees giants, he sees windmills (chapter VIII), where his master sees armies, he sees flocks (chapter XVIII), and what hurts, hurts: the blanket they toss him in at an inn is not explained by enchantment. The gentleman promises him the insula in chapter VII, saying that perhaps within six days he may win a kingdom with others attached to him, one of which might fall to Sancho to crown as its king. Sancho speaks in proverbs and follows his master out of promise and attachment.
In Part Two, he changes place. In El Toboso, to avoid a message he never delivered, he invents that Dulcinea is enchanted and becomes the author of the illusion; the duchess tells him that the one deceived is he, and Merlin, during a hunt, imposes three thousand three hundred lashes on him. He governs Barataria with good sense and goes hungry under a farcical doctor; he leaves the government saying he was born naked and finds himself naked, neither losing nor gaining. In chapter LX, with his knee on his master's chest, he says he neither dethrones nor crowns kings, but helps himself, for he is his own lord.
At the end, it is he who tells his dying master that the greatest madness a man can commit in this life is to let himself die, with no one killing him, and that they should go to the countryside dressed as shepherds. Sancho is the point of view of one who disagrees with the gentleman without leaving him.