Iago builds on his first suggestions to make Othello curious is by pretending he doesn't want to talk when he says,
"Iago: Honest, my lord?
Othello: Ay, honest.
Iago: My lord, for aught I know.
Othello: what does thou think?
Iago: Think, my lord?"
By saying this Iago emphasises the importance of his thoughts and to anger Othello who has a short temper when people hide their thoughts so that he delays the answer and the contents of his thoughts.
Specifically Iago soon addresses jealousy, a major theme, especially with regards to Othello.
"It is the green-eyed monster"
becomes a symbol representing Othello's dark feelings, a spectre lurking in his mind and beginning to steer his behaviour.
Iago then talks about Venetian women by saying,
"In Venice they do let heaven see the pranks they dare not show their husbands; their best conscience".
The reason he say's this is to inform Othello that Venetian women are notoriously adulterous. He is lying to Othello because he knows Othello doesn't know how to treat women because he has been fighting for nine years for Venice. He then directly links Cassio and Desdemona,
"Observe her well with Cassio;"
He say's this because he knows that she will be irritating Othello to re-instate Cassio and Desdemona will not take "no" for an answer until Othello says "yes" then Othello will know that Desdemona has feelings for Cassio. He also refers to Desdemona's deception of her own father, implying she is also capable of deceiving a husband by saying,
"She did deceive her father, marrying you".
Othello has no idea of the significance of these statements, and so neglects to take them to heart. Othello then begins to say that he believes his wife is virtuous, which means that Iago finally addresses her directly, and further misleads Othello.
Iago makes himself seem innocent by getting close to Cassio and Othello be becoming their friends. He sticks up for them when they are around but when their backs are turned he uses and destroys them. He gets close so they “trust” him, as Othello often said, “Honest Iago”. Right from the start of the play Iago makes his intentions clear; “I follow him to serve my turn upon him”. He also says that he follows Othello for his own gain, “In following him. I follow myself”. The effect this has on Othello is that by Iago pretending to be honest, Othello will believe him what he says about Desdemona so he will become jealous.
When Othello returns, furious with Iago for having made him jealous. He wishes he never knew because he says,
“I had been happy if the general camp, Pioneers and all, had tasted her sweet body, So I had nothing known. (III.3)”.
Othello is angry as well because he demands that Iago bring him visual evidence that Desdemona is a whore or Othello will destroy him. Iago then uses emotive language by saying he will never be honest again since Othello is punishing him for his honesty. Othello says that he is of a divided mind about Desdemona's fidelity and Iago's trustworthiness. He does not know what to believe and wants some proof and Iago tries to tell him that the only real proof, to see them "topped", is impossible to get. Of course, Iago the opportunist already has in mind the handkerchief Emilia gave him but he knows he must wait, as that evidence will not yet convince Othello. To set Othello up for the handkerchief he tells Othello of the words Cassio supposedly muttered in his sleep:
"Sweet Desdemona, Let us be wary, let us hide our loves!"
then
"Cursed fate that gave thee to the Moor"
Othello believes Iago because of his own trust in him, his belief that "men are what they seem to be" thus Iago isn’t lying, and because of the realism of what Cassio supposedly said. Othello once again is sure of her infidelity, except even stronger than before: "I’ll tear her all to pieces!" and Iago then goes on to talk of the handkerchief he saw Cassio wipe his beard with. Of course he knows that this handkerchief is one of Othello’s dearest presents to Desdemona and since he has the handkerchief he knows that if Othello asks Desdemona for it she will not be able to produce it.
Iago's monstrous fabrication seems to Othello more real than reality itself. He is enraged and curses his beloved: "Damn her… O damn her". Othello cries out for blood. He kneels and vows to heaven that he will take his revenge on Desdemona and Cassio, and Iago kneels with him, vowing to help execute his master's vengeance. We know Othello is convinced because he promotes Iago to lieutenant.
Thus, we can see that while Iago hatched the plot carefully and carried it out using other characters, Othello sealed his own fate by being too trusting, too socially, and too emotionally insecure.
Iago is succeeding in making Othello evil. By the end of this scene, Othello no longer recognizes Desdemona as human, calling her a "devil" (479).
His primary concern is not for her alleged infidelity, it is for his personal peace of mind. He is hurt by her adultery not because it means he has lost her but because of its nefarious effects on his pride.