"with Sancho in the middle of the blanket, they began to toss him up and down"

   What might seem a bizarre assault out of context was an established practice at the time, repeatedly referenced in medieval and renaissance literature - 'canvassing' or 'blanketing' victims high up into the air, either as entertainment at festivals or, as here, a light-hearted but humiliating form of punishment.  The custom is still practised by descendants of Inuit tribes as a traditional sport, and by excitable teenagers as a cheap means of entertainment.

Online copy of Medieval mystery 'The Second Shepherd's Play', featuring punishment by canvas-tossing (page 69).

Online copy of William Shakespeare's Henry IV, Part II (circa 1599) featuring threat of same (page 303)