In Volume 1, Book 4, Chapter 9, Arthur (disguised) holds his own in a fight against Accolon, who Morgan le Fay has equipped with Excalibur. The dramatic irony of the scene helps build Arthur's kingly authority:
Then were they wroth both, and gave each other many sore strokes, but always Sir Arthur lost so much blood that it was marvel he stood on his feet, but he was so full of knighthood that knightly he endured the pain. [...] Accolon was so bold because of Excalibur that he waxed passing hardy. But all men that beheld him said they saw never knight fight so well as Arthur did considering the blood that he bled.
None of the onlookers knows that it is Arthur whom Accolon is fighting, nor does Accolon know it himself. While Arthur is fending off an assassination attempt by his sister, Morgan le Fay, it simply looks like Accolon is a ferocious fighter and that Arthur is outmatched by him. But the fight lasts longer than anyone expects, given that the amount of blood Accolon is spilling should mean that Arthur will lose quickly. He impresses everyone who is watching the fight by continuing to fight well. In fact, Arthur is fighting even better than anyone knows, given that the weapon Accolon is using is Arthur's own magical sword. Even not knowing this, the audience is left wondering how Arthur is lasting so long in this fight.
Also unbeknownst to onlookers, Nimue intervenes in the fight on Arthur's behalf. This finally allows Arthur to get the upper hand, at which point he reveals his identity. To everyone watching, this is a climactic answer to the question they have been asking this whole time. Because Arthur is a king, he is stronger and braver than Accolon. The logic here is circular: Arthur is a king because he is inherently strong and brave, and being a king makes him strong and brave. Still, this is the way many people thought about kings in Malory's day and earlier, especially given the notion that God imbues kings with the power to rule. If anyone had doubted Arthur's fitness to rule before, the resolution to the dramatic irony in this fight strengthens his standing as a king.
There is extended dramatic irony in Book 7 regarding Gareth's identity. The dramatic irony peaks in Volume 1, Book 7, Chapter 33, when Gareth and Gawaine unknowingly fight one another:
[...] Sir Gareth stood there alone; and there he saw an armed knight coming toward him. Then Sir Gareth took the duke’s shield, and mounted upon horseback, and so without bidding they ran together as it had been the thunder. And there that knight hurt Sir Gareth under the side with his spear. And then they alit and drew their swords, and gave great strokes that the bood trailed to the ground. And so they fought two hours.
[...][Linet] cried all on high, ‘Sir Gawain, Sir Gawain, leave thy fighting with thy brother Sir Gareth.’
Gareth does not realize that it is Gawaine charging toward him. He only knows that an armed knight is coming to attack him, so he prepares to charge the knight himself. Although it is common for knights of the Round Table to have scuffles with one another, it is a bit more serious for Gawaine and Gareth to draw one another's blood. They are brothers, so one's blood is also the other's blood. At the end of the book, Gawaine proves especially committed to this idea. He is so angry that Launcelot has killed his brothers that he urges Arthur on to war. If Gawaine knew that he was fighting with his brother, he would likely never have drawn blood.
As soon as Linet reveals each of their identities, the brothers stop fighting and declare friendship. This is an important moment for Gareth because he has been striving for recognition as a man who deserves to be knighted, regardless of his blood or name. Gawaine's recognition that Gareth is his brother only after they have matched each other in battle, and only when someone else reveals Gareth's name, indicates that he is recognizable as a knight even without his name.
An instance of both dramatic irony and situational irony occurs in Volume 1, Book 8, Chapter 24. The queen has given Dame Bragwaine and Gouvernail a love potion for La Beale Isoud to share with King Mark, but La Beale Isoud and Tristram unwittingly share it:
And then anon Sir Tristram took the sea, and La Beale Isoud; and when they were in their cabin, it happed so that they were thirsty, and they saw a little flacket of gold stand by them, and it seemed by the colour and the taste that it was noble wine.
Then Sir Tristram took the flacket in his hand, and said, ‘Madam Isoud, here is the best drink that ever ye drank, that Dame Bragwaine, your maiden, and Gouvernail, my servant, have kept for themself.’
The dramatic irony is the most obvious here. The narrator has just recounted how the queen is planning for the love potion to help La Beale Isoud fall in love with the man she is being sent to marry. The reader knows that the wine Tristram sees must be this very love potion. As Tristram and Isoud prepare to drink the wine, the reader sits in suspense, waiting to see what will happen when the love potion cements not Isoud and Mark's love, but rather Isoud and Tristram's.
The love potion incident is also laden with situational irony. The love potion is the perfect plot device to create an obstacle for a more real love affair. Indeed, that is exactly its intended role: it is supposed to supplant Isoud's love for Tristram so that she will be able to marry Mark without feeling unhappy. Meanwhile, Tristram will be left in the dust. Tristram has promised his uncle that he will bring La Beale Isoud back to Cornwall for Mark to marry. Without knowing anything about a love potion to take the edge off, Tristram is already planning to make this sacrifice in the name of honor. But instead of helping ease the pain of the sacrifice to La Beale Isoud (who doesn't seem to have had any choice in the matter), the love potion instead reinforces the love Tristram and La Beale Isoud already have for one another. The potion that was meant to make the arranged marriage easier instead adds the weight of magic to the main obstacle already in the way.
In Volume 2, Book 12, Chapter 4, Launcelot (banished by Guenever from Arthur's court) wanders bedraggled into the city of Corbin. The narrator uses a simile to highlight the dramatic irony of Launcelot's concealed identity:
And when Sir Castor was made knight, that same day he gave many gowns. And then Sir Castor sent for the fool – that was Sir Launcelot. And when he was come afore Sir Castor, he gave Sir Launcelot a robe of scarlet and all that longed unto him. And when Sir Launcelot was so arrayed like a knight, he was the seemliest man in all the court, and none so well made.
Launcelot has been wandering for a while, ever since he was tricked into appearing unfaithful to Guenever. He has lost some of his senses. Between his ragged appearance and his mental state, no one at Corbin recognizes him for the knight he is. Instead, they take him for a "fool." At the time Malory was writing, a fool would have been understood as a kind of entertainer whose performances could provide not only comic relief, but also lighthearted ironic commentary on society and politics. Launcelot is dressed up "like a knight" at the celebration of Sir Castor's knighthood because it is amusing for people in attendance to see a lowly fool in the garb of the "seemliest man in all the court." Dramatic irony adds another layer of amusement for the reader. While the characters really believe Launcelot to be a fool, the reader knows that there is no need for a simile. Launcelot in fact is a knight: to be dressed up like one is to be dressed up like himself.
At the same time, Launcelot is inhabiting the role of the fool perfectly. By donning knight's clothes, he helps highlight the fact that the people at Corbin don't understand what really makes a knight. Knights are governed by a complex chivalric code that their behavior ought to reflect, no matter what they are wearing. Gareth of Orkney, for example, shows up in Arthur's court dressed like a servant and spends an entire book proving that he is an excellent knight before he will reveal to anyone that he is in fact one of Arthur's nephews. The reader who has been keeping up with all of Malory's knights is thus in on another secret that the characters in Corbin are not -- the secret of what makes someone a knight.
In Volume 2, Book 12, Chapter 8, Brisen tricks Launcelot into sleeping with Elaine of Corbin. Multiple layers of dramatic irony in this incident lead to a rift between Launcelot and Guenever when Guenever catches her lover asleep with another woman:
[Launcelot] leapt out of his bed as he had been a wood man, in his shirt, and the queen met him in the floor; and thus she said:
‘False traitor knight that thou art, look thou never abide in my court, and avoid my chamber, and not so hardy, thou false traitor knight that thou art, that ever thou come in my sight!’
‘Alas,’ said Sir Launcelot; and therewith he took such an heartly sorrow at her words that he fell down to the floor in a swoon. And therewithal Queen Guenever departed.
Launcelot has willingly left his own bed and followed Brisen to Guenever's bed, but he does not realize that she has actually led him to Elaine's bed. It is strange to think that Launcelot could not realize who he is having sex with, but this crude joke (a clear example of dramatic irony) is common in literature around this time. For example, the same trope appears in Geoffrey Chaucer's Canterbury Tales, which he wrote in the 14th century.
Launcelot is not the only one who does not know everything. Guenever goes to Launcelot's bed and finds it empty. She tracks him down by listening for the sound of him talking about her in his sleep, something he habitually does. She thinks he is jumping out of bed because he is startled that she has caught him. This is partially the case, but he is also jumping out of bed because he is startled to find out that it is not Guenever in bed next to him. Launcelot does not have time before he passes out to piece together what has happened. Consequently, he can't fill Guenever in on how he came to be in Elaine's bed. Her assumption that he has knowingly betrayed her leads Launcelot to jump out the window and flee the castle when he wakes up. He wanders for two years and seems to lose his mind before anyone sees him again. Launcelot and Guenever both have only partial knowledge throughout the incident, and it leads them to hurt one another.
The dramatic irony makes this incident painfully funny for the reader, who can see exactly how the misunderstanding happened. But on a closer reading, it seems that Launcelot and Guenever each could have avoided the situation anyway, despite Brisen and Elaine's manipulation. Even though the mistaken bedfellow is a common trope, Launcelot might have been able to pay more attention to whose bed he was lying in. As for Guenever, she seems too ready to blame Launcelot for betraying her. After all, she found him by listening to his sleepy ramblings about his love for her. If she had trusted in his devotion and asked for an explanation rather than jumping to conclusions, she could have prevented Launcelot's long absence from Arthur's court. As someone engaged in infidelity herself, Guenever seems all too ready to believe that Launcelot, too, will be unfaithful.
In Volume 2, Book 12, Chapter 10, Launcelot returns to Arthur's court after his long absence, during which he was mentally unwell. Arthur's explanation for why Launcelot "went out of [his] mind" is laced with dramatic irony:
‘O Jesu,’ said King Arthur, ‘I marvel for what cause ye, Sir Launcelot, went out of your mind. I and many other deem it was for the love of fair Elaine, the daughter of King Pelles, by whom ye are noised that ye have gotten a child, and his name is Galahad, and men say he shall do marvels.’
[...]
And therewithal the king spake no more. But all Sir Launcelot's kin knew for whom he went out of his mind.
Among other strange things he did while he was away, Launcelot reportedly struck down 500 knights in three days and called himself "Le Chevaler Mal Fet," or "the knight that had trespassed." Arthur assumes that Launcelot was wandering and losing his grip on reality because he was in love with Elaine of Corbin. This assumption is based on the rumor that Launcelot and Elaine have had a child together, Galahad. Arthur seems to believe that because Galahad is prophesied to "do marvels," the stakes around his conception may also have been high. Compelled by mystical forces to father a child with Elaine, Launcelot may have been driven to a long period of erratic behavior.
Everyone else knows that it is not Elaine, but rather Guenever Launcelot was "out of his mind" for this whole time. Arthur is not completely off the mark: Launcelot's wandering began after Elaine of Corbin and her servant tricked him into looking unfaithful to Guenever. Guenever banished Launcelot, and he jumped out a window. Although Launcelot could be said to have "trespassed" in King Pelles's realm by conceiving Galahad with Elaine, this claim is dubious given that Launcelot did not exactly consent to have sex with Elaine. Launcelot's much more obvious trespass is against Arthur, for having an affair with Arthur's wife. The fact that everyone except Arthur sees this makes Arthur look either foolish or deliberately obtuse. Either he cannot see what is happening right in front of him, or he is trying to ignore it so that his realm can remain stable as long as possible. The dramatic irony here raises the stakes of Arthur's eventual discovery that his favorite knight has been sleeping with Guenever. By that time, the betrayal will run so deep that repairing everyone's relationships will be all but impossible.
