Through the presentation of the mechanicals' play, we see just how absurdly ambitious the mechanicals are to try and perform their play, which helps to portray the theme of reality vs. illusion. We also see through their presentation just how hypocritical the royals can be, which also pertains to the theme of reality vs. illusion.
Despite their visions of grandeur, especially Bottom's, the mechanicals give an extremely absurd performance of Pyramus' and Thisby's tragic deaths. We know that the mechanicals' had visions of grandeur, especially Bottom, because earlier in the play we see Bottom proclaim how well he will perform his part, as we see in his lines, "If I do it, let the audience look to their eyes; I will move storms" (I.ii.22-23). Hence, we see that the mechanicals, especially Bottom, have an illusion of being able to perform a play well, but the reality is that they are too uneducated and too inexperienced to be able to know what they are doing and saying. We see many sad performances in this play, however, we especially see Bottom perform his role of Pyramus poorly when he breaks character. Theseus comments that the wall should curse at Pyramus, and Bottom breaks character to say, "No, in truth, sir, he should not" and to explain what Thisbe's cue is (V.i.188-189). Naturally, breaking character is a sign of poor acting, showing us that the reality is that the mechanicals are incapable of putting on a convincing performance despite what their illusions are.
We see the royals acting hypocritically with respect to their responses to the performance. Even though Philostrate, the man in charge of organizing Theseus's wedding celebration, recommended that the play not be performed as the mechanicals have no skill, Theseus ordered that it be allowed because the mechanicals are doing it in order to show him respect, as we see in his lines:
I will hear the play;
For never anything can be amiss
When simpleness and duty tender it. (87-89)
Theseus even says that if their play is not worth viewing then Theseus and his guests are being kinder to them for viewing it anyway, as we see in his line, "The kinder we, to give them thanks for nothing" (95). He further argues that he thinks the mechanicals' effort is important, not what they actually accomplish, as we see in his lines, "And what poor duty cannot do, noble respect / Takes it in might, not merit" (97-98). In other words, Theseus is saying it is his noble duty to show them respect for paying him honor. While Theseus does also say that they will have fun picking up on their mistakes, he gives no indication that he meant to criticize the performers out loud. However, not only does he and his guests criticize the mechanicals out loud, he actually criticizes loud enough for the players to hear. Since he and his company loudly insult the mechanicals' efforts, they fail to show the mechanicals the respect Theseus was talking about before, showing us just how hypocritical the royals are. Hence, while Theseus appears to be a noble leader, and is noble in most cases, the reality is that he has his share of hypocrisy as well.