When Algernon and Cecily find themselves alone in the garden, they strike up an immediate flirtation. Both characters are clever and charming, and attempt to both one-up and impress the other with their wit. In this quote, Cecily tells Algernon (whom she believes to be Ernest, Jack's immoral brother) that she would be disappointed if he turned out to be a good person rather than the "bad" one she has heard so many stories about. This statement is an instance of dramatic irony, in which the audience knows that Algernon is pretending to be someone who technically doesn't exist, and is in this moment living a "double life." In a way, however, by assuring Cecily that he is in fact the "bad" Ernest, Algernon is partly telling the truth about his own hypocrisy—he acts rather foolishly in the city, and pretends to have a dying friend in order to escape to the country. However, he is mostly just lying, because Ernest does not even exist; his antics are really those of Cecily's "responsible" guardian Jack. Here, Wilde further exposes the ridiculous rules of Victorian society, in which it is perhaps better to be truthful about living a life of sin than to be lying and to actually be a person of upstanding morals.
-