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The third person limited narrator does not know all in the story, which can make for dramatic irony. By that I mean that the reader might have insight into the situation or characters that the narrator does not have. I am sure you have watched a movie in which you wanted to yell to a character, "Look behind you! He has an axe!"
With the third person limited narration, we have some unknown person "looking down," but this person cannot see everything going on or peer into the minds of all the characters. Whether the narrator acknowledges it or not, he or she has a particular perspective, one which can be used to influence how the reader makes meaning of the story. What a narrator leaves out can be as important in shaping a story as what such a narrator includes.
A third person omniscient narrator affords a greater sweep in a story. This is particularly effective when one wants to know what people are thinking, not just what they are doing in the story. This point of view is also useful when a story takes place over a great period of time or in many places. One person telling the story makes for far smoother transitions for the reader.
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