Honesty is a popular topic in Othello and one of the underlying themes. Appearance and reality have a firm hold over all the relationships that Iago has, especially with Othello who trusts him above all others; his friend "honest" Iago.
Iago firmly plants the seeds of doubt in Othello in Scene III as he can supply the "ocular" proof that Othello needs. The irony is acute as Iago claims that
"men should be what they seem" (III.iii.127)
which could serve as a warning to Othello but instead promotes his irrational behavior more.
By the time Scene III reaches the point where Iago says
"to be direct and honest is not safe"
in Scene iii, line 382, Iago is playing Othello and enraging him further whilst giving the impression he is his friend. His deceit is clever and he is cunning, allowing Othello to reach his own conclusion about an apparent dream of Cassio's followed shortly by talk of the handkerchief.
Ironically, it is Desdemona's directness (her friendship with Cassio) and honesty that contribute to the ultimate tragic end.