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From a literary and historical perspective, Algernon is in part referring to a common 19th century tendency of the middle classes to adopt a policy of what is called "Grundyism". Grundyism is perspective of life that argues how all things must be virtuous, prudish, conventional, and "in proper order".
Mrs. Grundy, from which the term "Grundyism" is originated, is the main character of Thomas Morton's Speed the Plough (1798). Her behavior and description epitomized the very values that Queen Victoria's encouraged her subjects to follow: family, tradition, religion, virtuosity, and righteousness.
In a letter to the St. James's Gazette penned in 1890, Oscar Wilde defended his homoerotic novel *by then, a story* The Picture of Dorian Gray by pointing out how Grundyism has become a phenomenon of the middle and lower classes that loyally adopted Victoria's views of propriety.
The sphere of art and the sphere of ethics are absolutely distinct and separate; and it is to the confusion between the two that we owe the appearance of Mrs. Grundy, that amusing old lady who represents the only original form of humour that the middle classes of this country have been able to produce.
Meanwhile, the upper-class peers of a man such as Algernon Moncrief would gladly overlook Grundyism and indulge in the behaviors that directly oppose its prudish nature. This is why Algernon, an upper-class man by way of connection, expects for his butler, a lower-class man, to "set the example" of prudish behavior that is common to Grundyism.
When Algernon says
if the lower orders don't set us a good example, what on earth is the use of them
he is literally distancing himself in terms of class and behavior from the lower classes.
The "good example" refers to the previously mentioned Grundyist behavior.
The "use of them" means that the middle and lower classes have found their identity and their voice in the ridiculous Mrs. Grundy and, in order to have any leverage in society (this is from Algernon's point of view), they might as well serve as the conduits of prudishness that the upper classes flatly refuse to follow. Hence, in Algernon's world, people like Lane are merely Grundy pundits that preach to the deaf ears of the "fashionable society".
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