Ill Met by Moonlight

Background
"There are stories in Falkreath of a strange vagrant who savagely killed a little girl." "I've met Sinding, a werewolf who the Daedric Lord Hircine has punished by preventing his transformations. He's given me the ring he stole and asked me to entreat Hircine for forgiveness"

- The Dragonborn

Walkthrough
You start this quest by asking Mathies Caerellia "Who died?", and then speaking to Sinding, a prisoner in the Falkreath Barracks. Alternatively, you may speak directly to Sinding to start the quest. He will tell you of a rare animal that needs to be killed to appease to Hircine, the Prince of the Hunt. Sinding gives you the Cursed Ring of Hircine that will make you randomly transform into a werewolf. After that, he escapes. After you kill the animal, its spirit will appear to you, and through it, Hircine will speak. He'll command you to go to the place where Sinding has fled and instruct you to kill him, to gain favor with Hircine.

Once you've arrived at Bloated Man's Grotto, you'll meet some hunters, horribly outmatched by the werewolf Sinding. You can choose to either try to kill Sinding, or to ally with him and kill all the hunters. The reward you receive varies depending on this choice:

Both choices remove the Cursed Ring of Hircine from your inventory.
 * 1) If you kill Sinding and take his skin, Hircine appears to reward you with the Savior's Hide, a leather-based light armor which gives magic and poison resist.
 * 2) If you kill the hunters, Hircine will appear once you leave the grotto and commend you for turning the hunt "inside out" - giving you his blessing and transforming the ring into the Ring of Hircine. This ring gives the user unlimited werewolf transformations. (Note: You must already have the power to transform into a werewolf in order for this ring to take effect).
 * 3) You may also obtain both items by killing all hunters then removing Sinding's skin.(Note: It is easier to trick him into believing you are on his side then slaughtering him in the end. Both items count toward the achievement: Oblivion Walker, making the achievment still obtainable if another daedric quest is failed).

A video walkthough is available here

Conclusion
"I met Sinding, a werewolf that the Daedric Lord Hircine had punished by preventing his transformations. I helped kill him as a service to Hircine, and have been rewarded with Savior's Hide."

"I met Sinding, a werewolf who the Daedric Lord Hircine had punished by preventing his transformations. I defended him against the hunters that Hircine sent to end his life, and earned his friendship."

Trivia

 * "Ill met by moonlight, proud Titania," is a line, said by Oberon in A Midsummer Night's Dream, written by William Shakespeare.