How does Quixote explain losing the battle with the “giants”? What are these giants, and why can he not defeat them?

Don Quixote explains to Sancho that the windmills he thought were giants really were giants; he says that Friston turned them into windmills to prevent him from getting the glory of killing them.
When Don Quixote sees the windmills in the distance, he immediately perceives them to be giants. When Sancho Panza can't see giants and questions Don Quixote, the hero insists that they're giants. He says that they're two leagues tall with long arms. Of course, he's seeing windmills moving in the wind. When Sancho points this out, Don Quixote refuses to believe it.
Of course, it's impossible for Don Quixote to vanquish windmills. They aren't an adversary that he can defeat. Still, he sticks his lance into them and the lance is torn apart. He and his horse and thrown out by the force of the windmill. Sancho hurries to help him and explains again that they're windmills.
Don Quixote doesn't want to hear it.
He insists again that the windmills were giants; he says that Friston turned them into windmills. His rationale is that doing so prevented him from getting the glory associated with slaying dozens of giants. He says that it's the result of how much Friston hates him—but that the hate he bears him will not matter because his "wicked arts will avail but little against [Don Quixote's] good sword."
Of course, his windmills were never giants. They were always only windmills.