with the way the game is designed, where you don’t have to charge into the story, i think you could play as a refugee/blacksmith indefinitely, until you decide to change profession or interact with the nobles, possibly entering the storyline that way.
Also i believe craftsmen where held higher than standard peasants
I agree, craftsmen were most certainly higher than peasants although they were still commoners(blacksmiths were not exactly the most respected commoners). By this time in the high/late middle ages it was very hard for a commoner to become a knight. The only way I can see Henry being knighted is after a large battle or siege.
I read an account from an earlier time period of a soldier getting in a fight with a knight. The soldier won took the armor and made himself a knight. Then he found some noble to fight for and ended up saving the noble or something and being awarded land. Of course There no way of knowing if this is true or not. But If i ended up accidentally killing a knight and I was a skilled soldier I would go for it.
There is no “nation” and “nationality” stuff, this is medieval! There is only God and your liege lord! 
just offtopic
that sounds like parzival/perseval. it’s fiction. you don’t take some knight’s armor and “make yourself a knight”
I really do appreciate your comment. Same question. For me it’s a sci-fi to level-up from blacksmith-rat to King of the World. There are so many games when it is possible. But why in KCD?
It was more of the fact that a blacksmith is more than a common commoner
Well they were very much needed so there were many of them but they were not disrespected. Examples of less common commoners: Goldsmith, Silversmith, Bower, Armorer
This sounds interesting 
It diversifies the game, and lets you play your own little, secular story.
Hey. I fonud this interview with Dan Vávra. Especialy intereting thing he said in relation to this topic is: "Our goal is to give you authentic experience what it’s like to be a knight in medieval times."
So it seems our blacksmith migh really become a Knight.
Here is the source: http://pcgmedia.com/exclusive-interview-kingdom-come-deliverance-creative-director-daniel-vavra/
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I believe that king had the right promote anyone to knight for some heroic acts or so. Or maybe not and it’s just a game thing to allow us actually more enjoy the game and not stuck with crafting horseshoes 
lords typically had hundreds of knights under their command. they have to come from somewhere.
By the 1403 ‘knighthood’ was far less common than it had been in earlier medieval centuries. The cost and social requirements were massively prohibitive and a huge number of squires deliberately chose to forgo knighthood all together. In a military context knights, squires and senior soldiers were all considered to be ‘men-at-arms’ as a generalization for anyone who could afford to be properly armoured. Within the ‘men-at-arms’ soldiers could command companies of soldiers though knights would never allow themselves to serve under someone of lesser rank. A blacksmith could potentially be a commander of a company eventually but it’s virtually impossible for them to end up knighted and totally impossible for someone from non ‘knightly class’ to command an army unless everyone of better social rank was already dead.
I hate the trope of Blacksmith/farmer/peasant becomes knight/hero/general, the training and skills learned virtually from birth by knights would mean that it’s virtually impossible for a non-noble to go toe to toe with one and win let alone rise to some sort of greatness. Why not make Henry a low level squire to start with instead, it would help explain why he has the ability to ride a horse or swing a sword and give him a much more believable story arc.
Yes but i want a castle 
And I want space rocket!
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