In Viola’s soliloquy when Malvolio gives her the ring, she reflects on the concept of appearance versus reality. There are a lot of deceptions and confusions going on here. Viola realizes that Olivia has fallen in love with her male character, Cesario. She is kind of surprised at this, and a little impressed. It means that she has done well disguising herself as a man, but has failed at her task of wooing Olivia for her boss, Orsino. That’s fine for her because she is secretly in love with him.
Viola feels bad about Olivia being in love with her, when she is actually a woman. Olivia’s reality is so far different from the real reality, and it is all because of the appearance that Viola is perpetrating.
She loves me, sure; the cunning of her passion
Invites me in this churlish messenger.
None of my lord's ring! why, he sent her none.
I am the man: if it be so, as 'tis,
Poor lady, she were better love a dream.
Disguise, I see, thou art a wickedness,
Wherein the pregnant enemy does much. (Act 2, Scene 2)
Viola feels bad that Olivia, who vowed to never fall in love with anyone because she was in mourning, has fallen in love with a woman. Olivia pretended to return the ring back to Cesario, when really Viola wasn’t given a ring. It was Olivia's ring. It is a deception intended to get Cesario to come back, so that Olivia can talk to him.
With this speech, Viola realizes that her deception has caused far-reaching consequences. It has now extended beyond Orsino, and she has broken Olivia's heart. She never meant for any of this to happen and is not sure what to do, thus her last line is:
O time! thou must untangle this, not I;
It is too hard a knot for me to untie!