By Act 2, it is revealed that Don John is the villain, aided by Borachio and Conrade.
Don John is actually a fairly evil guy. His philosophy seems to be that if he isn’t happy, no one else should be either. There are too many happy people around him, he wants to make them unhappy. If they are unhappy, it makes his brother look bad, since they are staying at his brother the Don Pedro, the prince’s house. Don John does not like his brother, because his brother is legitimate and he is not, so he wants to bring ignominy to him wherever he can. Let’s face it, Don John is just the villainous sort.
Some people are in love with love, and Don John is the opposite. He hates it.
Don John hates his brother most of all, of course, but he doesn’t like anyone else either.
So he decides to interfere with Hero and Claudio’s wedding, even though they didn’t do anything to him. They are guests at his brother’s house, and that is a good enough for him to destroy their happiness. Down with love!
He can make all kinds of mischief when there is a wedding planned. All he has to do is make Claudio not marry Hero by tricking him into thinking she is unfaithful. He uses one of his minions to do that. Borachio and Margaret, Hero’s maid, stand at a window and do something unseemly, and Don John makes sure that Claudio sees them there and tells him it is Hero with another man.
Claudio renounces Hero as unfaithful at the wedding, and chaos ensues. He tells them at the wedding that he is going to give her back. When they ask him what he means, he explains.
Dear my lord, if you, in your own proof,
Have vanquish'd the resistance of her youth,
And made defeat of her virginity (Act 4, Scene 1)
Don John has done his dirty work. In fact, it even causes some friction with the other couple, Benedick and Beatrice, because Beatrice is so worried about Hero that she insists that Benedick do something about Claudio.
To accuse a girl of such a thing was a grave thing. He has basically ruined her reputation for life. She can never marry anyone else, if she doesn't marry him. The strange interchangeable bride thing aside, I can't see how their relationship will ever be the same, after he has shown that he does not trust her.
Is the ending satisfying? Don John gets away.
I would love to see him rot in some prison, but what could you charge him with? Inciting a rumor? As Shakespeare points out, that's pretty much all he did. He ruined Hero's reputation. He embarrassed her, the prince, and Claudio. He is a bad person and a worse brother. For that though, there is not much they can do.
This is a play about the power of love, and the power of rumor. Benedick and Beatrice fall in love, or realize they are in love, based on rumor. Claudio and Hero fall out of love based on it. Is it all much ado about nothing? Hardly. Rumor is the strongest force there of all.