Well, this is an interesting topic, Zangi. In the beginning, you'll probably have to start your family with country bumpkins, because their will not be much choice. But later on, you'll certainly have to arrange marriages and such, similar to Crusader Kings. On the in-between, I suppose you may be content marrying well-to-do merchants before you attain higher status.
But yes, prestige will be tracked as a gross account of your family's accountability/honor/quality, along with an actual status of your social position:
Status Requirements:
Start: "Yeoman",
Requires prestige and manor house: "Gentleman",
Requires prestige and must have peasants under you: "Esquire",
Requires prestige, must have fought for king, and have a small village: "Knight",
Requires prestige and a town: "Baronet",
Requires prestige and multiple manors: "Baron"
Requires significant prestige, and many manors: "Viscount"
Requires significant prestige, a city, and many more manors: "Count"
Requires enormous prestige, and must have significant armed forces: "Margrave"
Your family-head can become a "Duke" if your family marries into the royal family, (something that is significantly easier after you gain some status (i.e. almost impossible for a Knight to do so, quite difficult for a baron, but easy as cake for a Margrave). You can rise to "Grand Duke" with enough prestige and royal favor.
Once you conquer the kingdom itself, (or start your own kingdom), you can declare yourself "King"
And that's not all, conquer enough Kingdoms and bestow the godly title of "Emperor" to your portfolio.
You will not be able to knight anyone unless you are a King, however, you can always appoint lesser Gentlemen to hold your land in your name for manors you don't want direct control over.