As the play's court jester, Feste is characterized as both a witty and wise person. One of Feste's functions is to illustrate the merry, festive themes of Twelfth Night that are associated with the play's title. The play's title refers to the holiday celebrated on the twelfth day after Christmas known as Epiphany. Hence, Feste's name is a derivative of the word festival and his jokes and witticisms are characteristic of the holiday.
However, more importantly, Feste also functions as the play's wise observer, and as a wise observer, he also illustrates the theme of foolish human nature. Literary critics have noted that because Feste does not get involved in any of the play's conflicts, he is able to remain the play's objective observer (eNotes, "Feste the Clown (Character Analysis"). One of the things he observes is the foolishness of the other characters. For example, he notes that Olivia is foolish for wasting her youth and beauty by prolonging her mourning over her brother, especially when she believes his soul to be in heaven, as we see in Feste's lines, "The more fool, madonna, to mourn for your brother's soul being in heaven. Take away the fool, gentlemen" (I.v.64-65). He even rightly observes that Duke Orsino's love for Olivia is not really genuine and that Orsino actually will prove to be fickle, showing us just how foolish Orsino is for pining over Olivia. We see Feste call Orsino fickle when Feste declares, "[T]hy mind is a very opal" (II.iv.79-80). Since an opal is a stone that changes color easily, in likening Orsino's mind to an opal, Feste is calling Orsino's mind easily changeable, or fickle. Hence we see that as a court jester, Feste is characterized as being both witty and wise with the purpose of illustrating the theme of human folly.
One thing we know about Feste's characterization is that even though he plays the role of a fool, or court jester, he is actually one of the play's only sensible, intelligent, and perceptive characters--the only character who is actually not foolish.
We especially see Feste's wisdom and perception in the very first scene in which we meet him, Act 1, Scene 5. Here, when Olivia, angered by his long absence, declares, "Take the fool away," Feste wisely turns her own words against her, calling her the real fool. Feste's argument is that her prolonged mourning over her brother is foolish and a waste of her youth and beauty, especially because she believes her brother's soul to be "in heaven," as we see in his lines, "The more fool, madonna, to mourn for your brother's soul being in heaven. Take away the fool, gentlemen" (I.v.64-65). Later, Feste even rightly observes Duke Orsino's love for Olivia to be just an illusion andwisely calls Orsino fickle, which predicts the ending of the play, as we see in Feste's lines to Orsino:
Now the melancholy god protect thee; and the tailor make thy doublet taffeta, for thy mind is a very opal. (II.iv.78-80)
Since taffeta is a type of silk that changes color with the light and an opal is a type of stone that also changes colors easily, Feste is declaring Orsino to have a changeable, or fickle, mind, showing us that Feste rightly knows Orsino's proclaimed feelings of love for Olivia are not really as genuine as Orsino would like to believe they are. Since Feste wisely sees the foolishness of both Olivia and Orsino, we can say that Feste is characterized as the only character in the play who is not foolish.