Yes, I absolutely agree! Two events in Cervantes' lifetime were the crusades and the inquisition, which were both zealous reactions to a fear of the Muslim faith overwhelming Christianity. I think Cervantes recognized how fear distorts our view of the world and used that very effectively in his work. The example of Don Quixote mistaking windmills for mythical giants has become a part of popular culture because it's an easy to understand metaphor for that kind of thinking.