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An understatement is used when someone claims to be or to do something that is clearly less great or less important than what it really is.
An example of understatement in chapter 1 is found when Ethan sees Denis Eady dancing with Mattie. Ethan is upset because Denis and his father, an ambitious Irish grocer, are considered "smart" by the community. This, however, comes from the combination that success, money, and risk-taking often elicit admiration from people.
When Ethan gets upset at the sight, he is already irate, but then he gets even more angry, wishing to really hurt Denis Eady.
Hitherto Ethan Frome had been content to think him a mean fellow; but now he positively invited a horse-whipping.
The understatement is that to merely call the man "mean" is nothing compared to what Ethan really wants to do, which is to give him a horse-whipping; the horse-whipping had been understated by his first reaction of calling Denis a "mean" man.
Another understatement is found in that Mattie clearly cannot do housework. To this, Ethan makes the excuse that
She don't look much on housework, but she ain't a fretter, anyhow.
Yet, that is an understatement because Ethan has to work twice over covering her tracks: she mops and sweeps when the women are asleep, and he was even caught at the churn by none other than Zeena. Hence, to make any excuses for Mattie is to understate the fact that she is quite a lousy housekeeper.
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