Caballero literally translates to "knight" or "gentleman". It's a classic and evocative word that immediately brings to mind images of chivalry and heroism.
In this song, the Gipsy Kings use "Caballero" to describe a brave and mysterious figure who fights for justice, defending the poor and his land. The repetition of "Caballero de fuego" (Knight of fire) and "Caballero valiente" (Brave knight) emphasizes his heroic and almost mythical status, making it a central and very enticing word from the lyrics.
"Caballero" builds its hero out of four props and almost nothing else: "Su capa, su sombrero y su espada" ("His cape, his hat and his sword"). He works after dark — "Aparece en la noche como un rondador" ("He appears in the night like a prowler") — and the town sides with him rather than with the law: "La gente del pueblo está con él" ("The townspeople are with him"), "Defendía a los pobres" ("He defended the poor").
The chorus never explains him. It chants at him — "Caballero, caballero de fuego" ("Knight, knight of fire") — and then breaks the word apart into "Caba, caba, caballero valiente" ("Caba, caba, brave knight"), the way a crowd shortens a name it already knows. What he leaves behind is a word rather than a body count, "Su nombre significa libertad" ("His name means freedom"), and the last image the song gives you is light rather than a wound: "Su espada ilumina la noche" ("His sword lights up the night").