What is the purpose and effect of Duncan's and Banquo's comments when they approach Macbeth's Castle?

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Dramatic irony is created when the audience knows more than the character, and following this knowledge, something ironic happens. For example, when Duncan and Banquo arrive at the Macbeth's castle, we know that the Macbeths are inside plotting Duncan's murder, but Duncan does not know this. The irony comes when Duncan describes the castle as "pleasant." This will actually be the place where he spends his last night on earth, but because he is not aware of this, dramatic irony is created. We know what's coming, and Duncan's arrival at the castle is but another step he takes toward his own death, and his statements about the castle's pleasantry are ironic. Our knowing this—while he is unaware—creates tension. Tension builds throughout the play, leading up to the climax, making the play more exciting for its audience (or readers). This scene gives us further evidence of how trusting Duncan is, and we seem meant to like him because he's been such a decent human being and a good and just king. Because Duncan is so likable, it makes Macbeth look all the worse when he kills Duncan.

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The dramatically ironic comments by Duncan and Banquo when they approach Macbeth's castle in Shakespeare's Macbeth serve numerous purposes.  One of the most important is the reinforcement of a central theme first introduced by the witches and later echoed by Macbeth:  the difference between appearance and reality--what's fair is foul and what's foul is fair. 

Duncan and Banquo interpret the appearance of the castle and its surroundings as if a wholesome, noble, and faithful family live there.  The air is sweet, etc.  But just as the traitor Macdonwald was a man Duncan put absolute trust in, so is Macbeth, and both the king and Banquo misjudge him.

In fact, the castle is compared to hell by the porter and Lady Macbeth invokes the help of spirits to make her more evil and mortally aggressive.  While the Macbeths appear to be acting as hosts, they are really planning an assassination. 

The Macbeths are not wholesome and noble, and are faithful only to evil "spirits" and their own ambition. 

The misguided comments by Duncan and Banquo demonstrate that they are clueless as to what the Macbeths are really like:  they don't realize that though they appear to be fair, they are really foul.

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