Juliet dearly loved her cousin Tybalt, and the quote shows her reacting with blame and anguish as she hears that Romeo has killed him.
Here, reacting with raw shock to the news, Juliet is initially wholly a Capulet, blaming Romeo for what has happened without knowing all the details. She uses a string of oppositions or paradoxes to convey her fear that underneath a sweet exterior, Romeo has an evil nature. She says a beautiful face hides an evil and deceptive heart, and she compares his destructive soul to a dragon disguising itself in a beautiful cave that it uses to lure people in. She says he is both beautiful and tyrannical, a devil underneath an angelic appearance.
These impulsive and uncensored utterances show how the feud tears people apart, and it also indicates that much of Juliet's attraction to Romeo is based on his looks. She is wondering, in the first shock of grief, if she has made a mistake in falling in love with and marrying him.
As an audience, we know, as Juliet does not, how hard Romeo tried to avoid a fight, and we recognize that he only killed Tybalt because he felt responsible for Mercutio's death and filled with anguish over the loss of this dear friend.
Juliet will come to her senses and quickly repudiate these words about her husband, scolding her nurse when she begins to agree.