Irony is a literary or stylistic device in which one states something that is in discordance with what is expected. In brief, irony is when someone says one thing but means something else. An understanding of irony depends entirely on an understanding of context. If it is raining and you say, 'nice weather we're having, don't you think?' then there is evidence of irony. Without the context, i.e. rain, the meaning is different.

There are several forms of irony. The example above is a form of verbal irony. Furthermore it takes the form of a question, which is not meant to be answered. Rhetorical questions such as these also fall under the category of verbal irony, just like sarcasm, hyperbole, understatement or double entendre.

Another form of irony is situational irony. Situational irony occurs when the opposite happens from what one would expect. For example, in this image, one would expect these people to take the stairs instead of the escalator, as they are interested in working out and improving their health. One could say it is ironic that they are taking the escalator. 

In literature, we come across another form of irony: dramatic irony. This is where the audience knows more than the characters. For example in his autobiographical novel A Long Way Gone, Ishmael Beah, a child soldier from Sierra Leone describes a remarkable event that happens to him when he visits New York. White flakes fall from the sky. Naturally, the reader knows this is snow. We know more than the narrator. Similarly in Shakespeare's play Othello, the audience knows that Desdemona has been faithful and that Iago is scheming to overthrow Othello, which Othello himself is ignorant of. These are two examples of dramatic irony. 

Irony is an important concept to understanding both literary and non-literary texts. Once you start noticing irony, you realize how much of human interaction depends upon it. It also makes us more aware of the importance of context in constructing meaning.