Sir John Barleycorn is the strongest knight.

Alcohol is imagined as a champion stronger than the people who drink it, however confident they may be in their own strength or self-control.

The contest is figurative: being defeated by Barleycorn means allowing drink to overcome one's judgment or resolve, not losing a fight to an actual knight.

Use the proverb as a pointed warning when someone assumes they can drink without being affected, or as a comment after drink has plainly got the better of someone.