Iago is called 'honest' more than fifty times.
Every character's trust is a knife the audience can see turning. The compliment becomes the accusation.
When the audience knows something a character does not, so their words mean two things at once. The gap between what is said and what is true is where the effect lives.
Ask what you know at this exact moment that the speaker does not. Then reread the line with both meanings active.
It turns the audience into a collaborator, and makes ordinary dialogue unbearable.
Iago is called 'honest' more than fifty times.
Every character's trust is a knife the audience can see turning. The compliment becomes the accusation.
A duke describes a portrait to a guest who has come about a marriage.
The duke thinks he is being charming; the reader can hear him confessing a murder to his next wife's family.
Dramatic irony requires knowledge, not superiority. If you are laughing at a character rather than dreading for them, the effect has changed into something else.