"Fair is foul and foul is fair" is a theme that suggests how appearances differ from the reality beneath the surface. A good example of this is how Lady Macbeth schools Macbeth to "look like the innocent flower/But be the serpent under't."
From the time we first meet her in Act I, scene v, Lady Macbeth is concerned about the goodness in Macbeth that she perceives as weakness. She wants to alter his natural, honest behaviour to create a two-faced murderer, able to smile and shake Duncan's hand, while simultaneously plotting the King's murder.
When she first suggests the potential that Duncan be murdered in their home, she comments on how easily Macbeth's face gives his true feelings away:
Your face, my thane, is as a book, where men
May read strange matters. To beguile the time,
Look like the time.
So, Lady Macbeth schools Macbeth in how to appear "fair" while remaining "foul" underneath.
She displays her own skill in this art at the banquet in Act III, scene iv. Even when she doesn't know exactly what has spooked Macbeth, she strives desperately to put a "fair" face on what is certainly a "foul" moment. She assures the lords assembled:
Sit, worthy friends. My lord is often thus...
The fit is momentary. Upon a thought
He will again be well.
And she condemns his inability to ignore the "foul" (Banquo's ghost) and put on a "fair" face as womanly behaviour:
This is the very painting of your fear.
...O, these flaws and starts,
Impostors to true fear, would well become
A woman's story at a winter's fire....
Why do you make such faces? When all's done,
You look but on a stool.
Of course, by the end of the play, Lady Macbeth's ability to put a "fair" face on what is "foul" completely breaks down and she dies from her own mad imaginings.
Well done for identifying the key theme from what the witches say at the beginning of the play. "Fair is foul and foul is fair" is certainly a motto that can be applied to so much of this excellent tragedy. For me, what this soliloquy represents is the further moral degeneration and paranoia of Macbeth as a character. Note how just before Macbeth begins his soliloquy, he bids Banquo farewell by saying:
I wish your horses swift, and sure of foot;
And so I do commend you to their backs.
He then goes on to plot the death of both Banquo and his heir, Fleance. We have already seen how the theme of "fair is foul and foul is fair" has been enacted throughout the play up to this point, with Macbeth and Lady Macbeth outwardly pretending to be devoted subjects of King Duncan whilst secretly plotting his murder. This again then represents a continuation of this theme as Macbeth outwardly wishes Banquo a good ride but inwardly is plotting his destruction.
Macbeth of course justifies his murder of Banquo by saying that it is only Banquo that gives him fear because of his qualities, which are in many ways superior to Macbeth's:
Our fears in Banquo
Stick deep, and in his royalty of nature
Reigns that which would be fear'd: 'tis much he dares;
And, to that dauntless temper of his mind,
He hath a wisdom that doth guide his valour
To act in safety.
Thus, to secure his position and make sure that the witches' prophecy of Banquo's heirs becoming king does not become true, Macbeth decides to rid himself of Banquo and his descendants once and for all. Notice how this is a murder he plans by himself, and also one that he gets others to carry out - reflecting his increasing degeneracy as he removes himself from the act whilst orchestrating it at a distance.
It is spoken through the witches in act1 scene1 and all three are gathered together looking into a pot.