This is a hostel, so you go in with low expectations - and you're immediately blown away. The "one-star" accommodations are on par with some places I've seen rated three stars. The common area is wood panel. There's an aquarium and couches. Yes, the room is small, but it's well laid-out with all of the comforts you expect: ensuite bathroom with shower, desk, free Wi-Fi, good lighting, hangers for clothes, and even an in-room safe. It's also decorated, and there's even a small balcony. Everything is clean, and there's daily service on the rooms.
Then there's the location. This place is maybe 100 yards/meters from both the Plaza del Sol, where you'll find performance art at almost all hours and the Sol Metro station, and the Plaza Mayor, where you'll find free walking tours. Restaurants and shops are close. Madrid is a very walkable city, and this is the heart of where you want to be, for a very low price.
If you're coming to Madrid, unless you have difficulty climbing stairs - which would be a deal-breaker, because this place is two flights up from the street level - I recommend that you stay at Hostel Commercial. It's a great fit for friends traveling together or couples looking to get away.