This monolgue is important for further revealing more about the character of Iago and how he intends to get his revenge against Othello. At this point in the play, Iago has had a chance to survey what he is up against. His attempts to thwart the marriage of Othello and Desdemona and discredit Othello in the process have failed, and he has now noticed that Cassio seems to have an unusual regard for Othello's wife, Desdemona. He plans to use this as part of his revenge. Note what he says:
Make the Moor thank me, love me, and reward me
For making him egregiously an ass,
And practising upon his peace and quiet
Even to madness. 'Tis here, but yet confused.
Knavery's plain face is never seen till used.
Note how the last two lines capture the key theme of appearances vs. reality which is so important in this play. Ironically, Iago seeks to get his revenge through appearing to be a friend to Othello and to be watching out for his best interests. By pretending to be a friend, Iago hopes to drive him "Even to madness," dispelling his "peace and quiet." The audience understands the kind of manipulative and highly intelligent person Iago is and how he plans to bring about his revenge against both Othello and Cassio. This monologue therefore reveals something of the evil cunning within Iago and how he deliberately deals in disguise and hypocrisy in order to bring about his goals.