Rules of Nobility and Feudal Structure
The King's Right
The King rules through divine right and owns /all/ lands within his given kingdom. All nobility ties to the King, or past Kings, in some manner (often through marriage of relations) in order to legitimize their privilege to oversee and manage lands in the King's name. All nobility pays tribute to their king in the form of taxes and the lending of military might when called upon to do so.
NO ONE but the King may make someone Noble, and ONLY the King has the right to remove Nobility from a person or their House. Noble Houses already standing at the time a King comes into power must swear fealty to the new King or risk being dissolved by the King or taken by force. If a noble house fails to keep their land secure and productive, they risk being stripped of their titles and lands which the King may award upon others who he thinks will manage the lands better.
Incompetence or poor management by a noble house is not to be tolerated by a strong Kingdom. A Duke therefor may find himself lowered to a Baron and become vassal in turn to another House if he lets his land's situation deteriorate to the point that his peasants try to revolt, for example. So he must deal with it swiftly or risk his own punishment from his lord, the King. Noble houses beware! Should it happen to a particularly powerful House, the King may risk war within his kingdom - so it is a two edged sword. A King can not easily hold power without the support of his noble peers.
Who can Ennoble?
No Vassal of the King may make someone else noble. If they do so, the King has the right to refuse to acknowledge said nobility. Becoming a vassal to an existing house does not confer nobility. A Knight (for example) or a Ranger may be allotted a parcel of land to oversee by his lord and may even establish their own minor House with lessor tenants, but it doesn't make their bloodline noble. A Duke can grant responsibility of a minor keep to a renown Knight but only the King may raise that valiant Knight to nobility. This is quite rare and almost never happens now that existing Houses are already established with plenty of sons and nephews to spread around. But if the knight in question accomplished great deeds for his Kingdom of exceptional note, the King may deem him worthy to establish a new line.
Anyone ennobled by the King has a very tenuous claim to nobility. Unless they are very powerful and clearly have the backing of the Gods, or their deeds are widely renown, their only hope of establishing legitimacy long term for their new line is by securing noble blood through marriage. For the case of our newly ennobled Knight, he would need find himself a noble wife of an established house (preferably with some blood ties, however distant, to the Royal House) to marry and thereby further legitimize the rights of his offspring to rule.
Ladies in Waiting are unmarried noble women who are serving as hand maidens to higher ranked noble women. In this case, the higher ranked noble woman is like a knight and the ladies in waiting are like squires, serving them but also being trained in how to manage a household for their future husbands, learning about noble politics, the raising of children, and many other aspects of a noble woman's life. A mother may teach her noble daughters many things they need to know but sending them away to become a lady in waiting is very often a 'finishing' stage to see that their daughters get a taste of how things are done in higher houses.
An example might be the Princess Ciarrah Kilgour, a noble woman of high standing married to the Crown Prince, Tyrel Kilgour. It would be a great honor for a noble daughter of a lower standing house to be sent to serve as the future Queen's Lady in Waiting. Such a hand maiden would learn a great deal more than she would learn staying sheltered away in her own house. It also opens opportunities to secure a /better/ marriage with the Princess's assistance than she might otherwise obtain.
(This is a great RP hook to step into that, like squires, we'd like to see used more for PC's.)
Long ago, Knights were originally nothing more than commoner soldiers who were mounted on horses to fight as light cavalry. Over time they became heavier cavalry with armour and tending to use spears or other polearms and with refinement of tactics. They began to become a force to be reckoned with on the field of battle. Horsemanship was taken to a new level in combat and traditions became established. This evolved over time into a new social class called knighthood.
Knights born of knightly houses are not noble, but also they are no longer commoners. A new in between social status has become it's own social class. With an honorable code of conduct they began to draw the notice and desire of nobility to become knights themselves, further cementing the idea that knights can't be commoners. Therefore knighthood has become a bridge, socially, between the two.
Therefor most knights are born of knightly families. Children are squired at a young age and generally male children of knightly families are expected, but not required, to become knights themselves. If they do not, then they become nothing but commoners, falling in social status. Nobles however may become knights if they squire to a noble knight. Socially they are expected to not lower themselves to squire to a non-noble knight, and non-noble knightly children should not squire to a noble knight. There is yet a step-above distinction yet retained even within the knightly class.
What does this Mean?
It means that it /is/ possible for a commoner to rise in social status. While very difficult, it is not /impossible/ for a commoner to get field knighted in battle if they have shown exceptional combat leadership or fighting skills. This would make them a true Hedge Knight, the lowest possible status within the knightly class. The term 'hedge knight' is a derogatory term among knights but it is still a step above being a nobody commoner or common soldier.
Another means for a commoner not born to a knightly house to become a knight is to be accepted as squire to a non-noble knight. Usually these would require the commoner family to have some money to pay for the squiring which is not cheap, and therefor is a relatively rare path.
Once a man has become a knight however, he is no longer considered as low in status as a common soldier. He has risen into the knightly class between commoner and nobility. It is thus not impossible that, with great deeds in combat and very knightly conduct in his social behavior, that such a man or his descendants can maneuver to be in a position that they /could/ become ennobled. This is also very rare. Nonetheless, if such a man stands out among his fellow knights as being truly exceptional and does such deeds as to gain the King's personal interest and favour, it isn't unheard of earning the grant of title as lord. The King is far more likely to do so with a proven knight than some nobody commoner, no matter what deeds they perform. Consider it a one step at a time process to prove one's blood worth. A knight who comes of a long line of knights is again more likely to be favoured than a hedge knight of very unproven bloodline.
Knights /can/ become vassals and administer very small estates with or without a manor. This does NOT make them noble, but it does make them vassals to their lord. This isn't quite the same as tenant status as it requires an oath of service and a smaller tithe percentage generally paid to the noble.
It isn't that uncommon to award the very best knights a manor when they have done great deeds to please their lords. These estates then could be handed down to their heirs, or revert back to the noble and regranted to other knights. It is one step closer to being nobility themselves but without actual legal title to the land. The noble still has authority to step in and tell the knight how to administer his lands, or if pleased they may leave such decisions in the hands of the knightly family. Such 'landed' knights often have commoner tenants to do the actual work of the land.
Lowest Social Class
At our time period of reference, there is no Middle Class. Nobility keeps a firm hand to control the commoners so that they may be tenants on noble or knightly controlled lands, but they themselves can't be vassals or 'own' land. They can rent and pay tithes to their liege but usually have no say whatsoever in how that land is developed. There can be rare exceptions but it's generally frowned upon for a noble to grant too much leeway to commoner tenants.
That said, it /is/ possible for commoners to become wealthy. It is fairly rare as the tithes paid to their lords is usually half or more of everything they make. Nonetheless, while commoners can not own land (all land is owned by the king and administered by his nobles), they can own businesses. A crafter can rent the building he uses to produce his work but he may own all of his own tools and make a tidy profit for himself and his lord. This can be saved and in turn invested in other business, or used to expand the land they lease as tenants. It makes it tricky to own a building however as the land does not belong to the commoner and thus any building done must be done with the permission of nobility. That is why real estate is kept legally separate from personal ownership of portable items.