Let me explain a little further. This old man has a very big hat that he's had for many, many years. He used to duel people for it, but is too old to duel nowadays. You want his hat so bad that you are inspired to travel back in time to beat up his younger self for it. All that to take an old man's hat. Man, you're kind of a jerk.
Yeah, I'm a jerk, too. I ran to Old Hillsbrad immediately. The fight isn't too hard, there are a lot of classes that can solo it on Normal difficulty, especially when overgeared for the instance. To be safe, you may want to take some friends. He wanders up and down the road on horseback, with his friend Guerrero. Guerrero can be crowd controlled, but Carlos cannot. Don Carlos himself roots you, casts Scatter Shot, Aimed Shot, and melees for a decent amount. His crowd control is annoying, but again, he's not too tough. Once you beat him, go acquire your hat, and begin wondereing where the Azerothian equivalent of Spain can be found.