What is the significance of this quote and how does it describe Hale as a character: "I may only fear the lord, sir, but there is fear in the country nevertheless" (Act III)?
Mr. Hale utters this line in the courtroom when he is attempting to persuade Deputy Governor Danforth that he should listen to Giles Corey's testimony concerning a man who does not want to be named. Giles claims that this man overheard Thomas Putnam incriminate himself as having a hand in prompting his daughter to make accusations against others in the town (because Putnam wants the opportunity to acquire the land owned by some of those accused). However, Giles's unwillingness to name this man proves Hale's statement that there is a "prodigious fear" of the court in Salem. Danforth interprets this to mean that there is "prodigious guilt" among the inhabitants of the town because, in his mind, there is no reason to fear the court unless one is guilty. Danforth implies that Hale has something to fear (as though he were hiding something), and when Hale speaks the line you've cited, he means that he has nothing to fear from the court because he is innocent. He rebuffs Danforth's thinly veiled accusation.
One thing this quotation shows us about Hale's character is that he is trying to do the right thing. He is sticking up for the people of the town, trying to impress upon Danforth that there are other reasons besides guilt that they might fear the court. This line shows us that Hale is trying to work with the court and the people too. He is a good and honest man.
When religious people use the word fear, especially in reference to God, it means several things. First, it means to revere or respect. It can also mean to be concerned of God's upcoming wrath.
The fear he notes in the country has to do with folks being afraid of the accusations. Good and moral people who had done nothing worth the life sentences they were receiving were being forced to accept a poor reputation or die.
I think this quote shows Hale's own worry about the accusations being made. I think it shows he cares about people sincerely. I think he wants to see justice work not just for the guilty but particularly the innocent. I also think he hopes he is not eventually condemned for his sincere faith.