In Act I, how does Iago believe that people are promoted within the ranks? What effects does his commentary have on the audience?
The effect of Iago's comments is to let us, the audience, in on 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 makes himself out to be and that we are not to believe in his outward representation of himself. He has become embittered at the perceived injustice of being passed over for promotion in favor of Cassio - and all because his boss Othello seems to prefer Cassio as a person, enjoying his company more. 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..'
In Act I, Iago reveals to Roderigo that Othello does not promote men based on ability, rather, Othello chooses based on his affections toward the person. This is why Iago is consumed with hatred and jealousy for Cassio. He believes that Cassio was chosen solely because Othello is fond of him. Iago reveals his contempt for what he sees as “many a duteous and knee-crooking knave” who spends his military career in service to an officer.
This commentary allows the reader to see that Iago is full of jealousy and hatred for Othello and Cassio, and it warns the reader that a plot of revenge will follow. in doing so, the audience becomes aware of Iago's duality as noted in the quote, "I am not what I am."