In act 3, scene 1 Polonius is using his daughter as bait so that he and Claudius may spy on her conversation with Hamlet. He wants Ophelia to act as natural as possible, and so he instructs her to walk exactly where they know Hamlet will walk, and he gives her a book to pretend to be reading, perhaps the Bible or a prayer book, which would add to her sweet and lonely aura. After this direct instruction on how to be deceitful, he admits right in front of her, “We are oft to blame in this / (‘Tis too much proved), that with devotion’s visage and pious action we do sugar o’er / the devil himself.”
Polonius is saying that humans too often act in deceitful ways, for which they are to blame. Not only is he admitting that he knows it’s wrong, he is saying that this has been proven true to him before. Clearly this “wise counselor” is unwilling to learn from his mistakes. In fact, he is currently making another mistake, in teaching his own daughter such behavior. He knows how to put on a fake face of devotion (perhaps to King Claudius?) and pretend that his behaviors are pious in order to cover up his immoral motives.
One must ask, if he is putting on a face of devotion and pretend pious action to his family and to the crown, what is his actual devilish motive that he is sugaring over? What does Polonius stand to gain by proving that Hamlet has gone crazy over unrequited love for Ophelia? Perhaps a daughter married into the royal family? And why does this not occur to King Claudius? Well, it actually might. But in that moment Claudius is too busy dealing with his own guilty conscience for sugaring over his own evil behavior, as we see when he comments in an aside, “O, ‘tis too true!”