In the midst of the play's "corruption scene" (Act III, Scene 3), Iago says to Othello that "men should be what they seem" (III.iii.127). Here the arch-villain is referring to Cassio, but the irony is plain enough, as Iago has already disclosed to Roderigo in the opening scene of this tragedy: "I am not what I am" (I.i.65). Via Iago's interwoven schemes, the demise of Othello is propelled by the disparity between appearances, on the one hand, and underlying reality, on the other. It is most often through Iago that this gap is highlighted within the play's text.
Iago, the agency of human evil, is able to twist the distinction between what something is and what it appears to be, and it is this deception that stands at the bottom of Othello's tragic tale.
Modern audiences may wonder how someone could go from being so wholeheartedly in love and thinking his wife perfect to turning so jealous that he is ready to kill her. Shakespeare's answer might be that jealousy, like a virus, propagates itself. Once a jealous thought is planted, it uses everything it sees to support its hypothesis. Hence, Othello's passionate love is turned nearly instantly to passionate hatred. Iago has done his work; now he need only sit back and watch it all play out.
Shakespeare develops this theme through the most important pieces...words., and very carefully chosen ones. Iago has planned an elaborate scheme involving a host of players, including Roderigo, Cassio, Othello, Desdemona, Emilia, etc., and he has lied to most of them. He has planted seeds of doubt and he has planted lies. He has manipulated everyone around him to ruin Othello. Iago, then, is living an illusion in that he is simply misleading others into thinking that other people have been deceitful, etc., which is not reality.