The gentry were the elite of the countryside. They were either lords of a manor, in which case they held the land outright, or were gentlemen freeholders, who were tenants of some greater lord. Either way however, they lived off of rents paid by their tenants, and most importantly, they did no manual labor to support themselves. The ability to live without manual labor was the measure of gentility. They were the true rulers of the countryside, and nothing of importance in the neighborhood went forward without their knowledge and consent, or if they were absent landlords, the knowledge and consent of their steward or bailiff.
Their economic and customary power was augmented by the government with legal power. The most substantial country gentlemen were appointed as Justices of the Peace, and given the brief of enforcing the law and meeting out justice in the community. The gentry also filled all the other local offices, such as sheriff or surveyor of the roads. Often the offices carried with them no pay, but they did confer power, which brought added prestige and could, of course, be parlayed into "gifts" (read bribes).
From the ranks of the gentry were drawn the knights. By this time, knighthood had ceased to be a purely military appointment, and many knights had gained their position through non military service to the crown. A knighthood was not hereditary, and though it gained the holder some status, it did not in any way increase his income or his actual power.
Just below the knights were the esquires. These were the more distinguished members of the country gentry community and were distinguished from the run of the gentry by the privilege of bearing arms (in the heraldic sense). A gentleman who had a coat of arms had the privilege of styling himself "John Smith Esquire".
All of the above degrees of the gentry could, and did hold local and national governmental offices, as well as serve in Parliament in the House of Commons.