Near the end of this soliloquy, Hamlet alludes to his state of mind when he calls himself "melancholy." As he has been since the play opened, and he arrived home to find his world altered, Hamlet is deeply depressed.
The soliloquy also shows he is filled with self-loathing, calling himself an "ass" because of his inability to move ahead and avenge his father by killing Claudius, a person he characterizes as a:
Remorseless, treacherous, lecherous, kindless villain!
Hamlet has a deep love for his father and a loathing for Claudius that impels him to want to avenge his father's death. He also knows it is the socially acceptable act under the circumstances: after all, Claudius has murdered his father. But the soliloquy also shows how disinclined Hamlet is by nature to want to participate in the bloodbath of a revenge culture. Inside his humane soul, he recoils from revenge. That's why Hamlet's observation of the actor is so significant: Hamlet understands that in becoming the son avenging his father's death, he is playing a role. He berates himself for not being able to play the role half as well as the actor plays the role of mourning over Hecuba. After all, Hamlet reasons, he is genuinely upset over his father's death—and yet is paralyzed.
Hamlet also realizes, as he states in the soliloquy, that he understands the devil may be taking advantage of his "weakness," his grief over his father's death, to trap him into killing a possibly innocent man. As Hamlet states,
The spirit that I have seen
May be the devil: and the devil hath power
To assume a pleasing shape; yea, and perhaps
Out of my weakness and my melancholy,
As he is very potent with such spirits,
Abuses me to damn me
Hamlet therefore decides to run the rational test of the mousetrap play to watch Claudius' reaction to a reenactment of the murder the ghost described.