Remember, first of all, that Hero was not the originator of this plan. She agreed to it, with as much say as she had, but the plan was that of the Friar's and created mostly on behalf of Leonato's shame and the truth of Hero's innocence. I'm including some quotes below from various characters that surround this plot development:
FRIAR FRANCIS (this is announcing the plan)
And let my counsel sway you in this case.
Your daughter here the princes left for dead:
Let her awhile be secretly kept in,
And publish it that she is dead indeed;
Maintain a mourning ostentation
And on your family's old monument
Hang mournful epitaphs and do all rites
That appertain unto a burial........ Marry, this well carried shall on her behalf
Change slander to remorse
LEONATO (this is when he informs Claudio of Hero's "death")
Canst thou so daff me? Thou hast kill'd my child;
If thou kill'st me, boy, thou shalt kill a man.
BENEDICK (this is his challenge to Claudio for "killing" Hero)
You are a villain, I jest not: I will make it good how you dare,
with what you dare, and when you dare. Do me right, or I will protest
your cowardice. You have killed a sweet lady, and her death shall
fall heavy on you. Let me hear from you.
HERO (revealing herself alive)
And when I lived, I was your other wife: And when you loved, you were my other husband.... One Hero died defiled, but I do live,
And surely as I live, I am a maid.
at the wedding, after claudio and don pedro had left, the friar tld leonato and the others to tell claudio and don pedro that hero had died after the humiliation at the wedding; to tell them that hero couldn't stand it and that she died on he stop. This would them make Claudio feel guilty and feel sorry for killing her. So hero has died to live and to keep her reputatuion.