In Medieval times, a knight was a mounted warrior in the service of a Lord. The word 'knight' is derived from the German word 'knecht', which means 'servant'.
See also: Chivalry
In the SCA, a knight is a fighter who shows great prowess at heavy fighting (heavily armoured hand to hand fighting) as well as behaving in a chivalrous manner.
As in medieval times, knights are made by the current king, to whom they swear fealty. They are chosen and recommended by a council of other knights. Good fighters who do not wish to swear fealty may become masters of arms.