The scene depicted is from Part I, Chapter XXI, in which Don Quixote and Sancho encounter a man wearing a strange glittering hat. Don Quixote mistakes the man for a mighty knight wearing the mythical helmet of Mambrino, and charges at him in order to win the helmet for himself. In reality, however, the man is a lowly barber with a basin on his head to protect him from the rain, and flees in terror when charged at, leaving Don Quixote to triumphantly claim the basin as his prize. This scene was first illustrated as part of a series of paintings by French artist Charles-Antoine Coypel (1694-1752), published as cartoons in 1718, which in turn were reproduced as copper engravings throughout Europe over the course of the eighteenth century. Illustrations from contemporary publications were a popular visual source for reproduction on Chinese porcelain, and as such these pieces represent the international exchange of visual and material cultures as the European demand for innovative and high quality Chinese ceramics grew. For an example of the kind of copper engraving which would have been used as a model for this plate, see 'Don Quichotte prend le bassin d'un barbier' by Louis Surugue after Charles Antoine Coypel, 1723-24 in the collection of the Metropolitan Museum (24.63.1671).
For a similar plate see Howard (D.) and Ayers (J.): China for the West, 1978, volume one, p.346 plate 344