Christopher Sly, a drunken tinker, stumbles out of an alehouse. After a brief argument with the alehouses' Hostess, Sly lies on the ground and drifts into a deep, inebriated sleep. While he sleeps, a mischevious Lord and his followers spot the sleeping Sly. The Lord decides to play a trick on the drunkard. He tells his servants to carry Sly to his own noble chambers and pretend that Sly is in fact a lord.
Soon afterward, a troupe of Players arrives at the Lord's house, intent on performing that night. The Lord informs them that "a lord" is visiting the house and will hear them play, and warns them of his "odd behavior." In the meantime, the Lord orders that his page masquerade as Sly's wife. The page will then pretend that Sly has been afflicted by lunacy for many years and has dreamed himself to be no better than a lowly tinker.
Scene two begins as Sly insists that he is his poor and drunken self; in protest, The Lord insists on Sly's nobility and implores him to wake from his malady. Sly finally begins to accept his altered social status when he finds out that he has "a lady far more beautiful/Than any woman in this waning age" (Ind.2: 62-63). At this, the page plays his part as Sly's wife, rejoicing at his "recovery," and a messenger readily announces that the Players are ready to perform. Sly sits beside his "wife" and prepares to take in the spectacle.
The Taming of the Shrew opens with a framing story, labeled the Induction in the text. This sort of device was quite common during the Elizabethan era. Nonetheless, it is worth noting the connotations of the word "induction" - as if we the audience were being inducted into a ceremony or institution in our honor. Sly is led to believe as much, falsely "inducted" as he is into the nobility. The entire play thus emerges as a device to fool the drunkard - and, by extension, us. The Lord is thus a representation of Shakespeare himself, staging a set of carefully controlled and convincing illusions. However, whereas the typical theater audience succumbs merely to the illusion of the stage, Sly succumbs to illusions about his own self. He must submit to the new identity the Lord has fashioned for him. In other words, he must become not merely spectator but an actor and character.
This paradoxical position - that we are watching Sly, a watcher, who is himself a spectacle for the Lord - informs The Taming of the Shrew proper. As the play unfolds, the specter of the observing fool, i.e. Sly, permeates the fabric of the Players' "illusion." Indeed, the play as a whole layers its theater to a dizzying degree, as the player's within Shrew also play-act and put on disguises. The results is a hall of mirrors wherein spectator is not easily separated from spectacle, and reality is not distinguishable from illusion.
Thus Shakespeare engages the paradox at the heart of theater: Sly is forced to "forget himself" (Ind.1: 40), to suspend disbelief, in order to make any sense of his new surroundings. In the same way, any audience member submits to the theatrical illusion despite its falseness. Drama and dramatic structure, in a way, become forces of order even as they are forces of fiction. Sly's supposed nobility and the story of his madness tempt him with their very ability to explain away the confusion he faces in the face of the Lord's spectacle; similarly, the audience as a whole can either choose to reject illusion and face confusion, or else to accept illusion and be rewarded with order.
The Induction contains many specific explorations of these questions of theater and illusion. Note that when Sly accepts his role as a lord - signified when he says, "Am I a lord?" (Ind.2: 68) - he immediately launches into a passage of blank verse that recalls the true Lord's poetic speech patterns. For instance, Sly says, "I smell sweet savors, and I feel soft things." (Ind.2: 71) Thus Shakespeare suggests that aristocracy is principally a matter of costume and dialogue - in other words, nothing more than a theatrical illusion.
The ability of illusion to match reality is further elaborated in the Lord's descriptions of paintings which might be fetched at Sly's behest: "We'll show thee Io as she was a maid,/And how she was beguiled and surprised,/As lively painted as the deed was done." (Ind.2: 54-56) The painting of Io is just as lively as the reality. Thus Shakespeare, through the Lord's words, playfully suggests that the play to follow will be as lively as reality itself. Why not, then, like Christopher Sly, submit to the ordering pleasures of illusion, and check our cynical doubts about theater at the door?