There are few things more perturbing to us than meeting an unpredictable person, someone who blows hot and cold is quite chilling. But there is a worse scenario and Shakespeare uses it very well, as when a character sets out to achieve this duality on purpose for sinister reasons ,people may have a lot to be scared about. In Othello, Iago even says out loud 'I am not what I am' as he reveals his motives and intent to the audience. The effect of Iago's disclosure is to confide his secret, so that in a sort of dramatic irony we will know what Othello (and others including his own wife Emilia) does not - that he is not all he seems and that we are not to be tricked by his outward representation of himself. He is bitter because of the perceived injustice of being ignored for promotion in favor of Cassio - because his senior -Othello -seems to prefer Cassio. This is Iago's peception of the situation. As far as he is concerned he is the more dedicated and skilled soldier. So he lets us into the secret that he will plan his revenge from within the ranks, still seeming to be the person he was.
'When my outward action doth demonstrate the native act and figure of my heart in compilment extern,'tis not long after but I will my heart upon my sleeve..'
Shakespeare develops his character by showing the intricacies of Iago's plot unfolding, through the eyes of the other characters and by using the audience secret knowledge to build suspense and a gripping rising action as we see Othello taken in by Iago's split personality.