Sancho argues that an enchanted person would not have the desires to use the restroom, eat, drink, etc. Quixote states there are many types of enchantments. If he were not enchanted, he would be a coward for letting himself be put into a cage.
Sancho offers to release Quixote so they can go on their adventures. Sancho asks the curate to release Quixote. The curate is reluctant, worried he’ll run away. Sancho and Quixote give their word that they won’t leave without his permission. The curate agrees to let him out of the cage.
The canon remarks to Quixote that amusing as tales of chivalry are, he is tempted to fling them into a fire when he sees a gentleman lose his wits over them. He tells Quixote these tales have caused him to be locked in an ox cart. If Quixote must read such tales, he should read the Bible, which at least lists deed that are both true and heroic.
Don Quixote tells the canon it is he who is out of his wits to denounce books on chivalry as lies. You can't prove these stories are any less true than the Greek myths. Some of the people Quixote has read about he has heard about from relatives who knew them or are descended from them.
The canon admits that some historical figures probably existed and some of the tales are true--though they are probably mixed with fiction and are greatly exaggerated.