It should be noted that this scene is needed to establish the fact that Duncan and Banquo are approaching Macbeth's castle. All the audience sees is a bare stage. The stage directions only call for woodwinds and torches. In the performances of the play there would probably have been no heavy props to suggest the outside of a big castle. Shakespeare typically relied on dialogue to establish time and place. Duncan is accompanied by Banquo so that the two actors will be able to speak to each other, and between them they create the illusion that they are in front of an imposing castle. No doubt both Duncan and Banquo will be looking upward as they speak their first lines of dialogue, appearing to be admiring the imposing architecture and fortifications. Most of what happens throughout the play takes place inside the walls of this imaginary castle, so it is a good idea for the author to establish its existence. The dialogue spoken by both Duncan and Banquo is unintentionally ironic, because this castle is going to become a house of horrors. Shakespeare informs the audience that Duncan arrives on a warm summer evening, perhaps in order to prepare for the contrasting storm when Macbeth commits his murder. According to Lennox:
The night has been unruly.Where we lay,
Our chimneys were blown down, and, as they say,
Lamentings heard i’ the air, strange screams of death,
And prophesying with accents terrible
Of dire combustion and confused events
New hatch'd to the woeful time. The obscure bird
Clamor'd the livelong night.Some say the earth
Was feverous and did shake. (Act II Scene III)
The exchanges between Banquo and Duncan are dramatically ironic because the audience is aware - having heard Macbeth and his wife's plans in Act 1 scene 5 - that Dunsinane castle is going to be the setting for Duncan's murder later in the evening.
Both Duncan and Banquo make references to the sweetness of the air which serves to develop the theme of appearance versus reality as introduced by the witches in Act 1 scene 1 when they chant: "Fair is foul and foul is fair / We hover through the fog and filthy air." In other words, while the castle seems pleasantly situated and the air "sweet", in reality the air has been made "foul" by Macbeth and Lady Macbeth's murderous plans, of which Banquo and Duncan are obviously unaware.
Duncan's declaration that Lady Macbeth is an "honoured hostess" is therefore ironic because the audience now know that her intentions are entirely dishonourable. Likewise, when Duncan refers to Lady Macbeth as a "fair and noble hostess" we are reminded once more of the witches' mantra. Similarly, Duncan is labouring under a misapprehension when he states that it is Macbeth's sense of duty and "great love" which helped him to arrive home so quickly. The audience now know that it was not love for Duncan but thoughts of sharing his wicked plans with his wife which "hath holp him / To his home before us."
It is also tragically ironic that Duncan says of Macbeth: "We love him highly" for that love is no longer reciprocated. Lady Macbeth has followed her own advice to her husband by looking "like the innocent flower" but being "the serpent under't" as Duncan takes her by the hand, symbolising his complete faith in her loyalty as a subject.
Hope this helps!