Irony is a contrast of what is literally expected and what actually occurs. Irony is the backbone of both comedy and mystery, as it creates unexpected situations that surprise the readers--either eliciting a laugh or a gasp. Irony works because it takes the previous comparisons-- metaphors, similes, allegories, and metonymy-- and turn it on its head. There are three types of irony and they work in different ways:

Verbal irony uses wordplay to contrast between what is said and what is meant. The most common verbal irony is the broken simile: "Well, that policy's clear as mud." There is still a similarity between the two items, but it is the opposite of the comparison expected, something clear. This type of verbal irony is called acyron-- when a word is used which is opposite to the normal word that should be applied (when acyron is used is a full phrase instead of a single world, it's called antiphrasis).

Sometimes verbal irony comes in the form of wit, as in Mae West's famous comment "I was as pure as the driven snow-- but I drifted." Some witticisms can drift into sarcasm and become quips, which use tone to demonstrate that what is said is the opposite of what's meant: "Oh, I'll get right on that." Since sarcasm depends on tone, it is very hard to convey in writing but very easy to convey in speech.

Finally, there are puns, which suggest a secondary meaning for words used for effect, as in Richard III's famous line, "Now is the winter of our discontent made glorious summer by this son of York." Most puns, which are short for the Greek term paromonasia, are intended to be humorous by eliciting a groan rather than a laugh: "I wondered why the baseball was getting bigger. Then it hit me."

Situational irony occurs when a what actually happens is the opposite of what is expected to happen. With comedy, something that should result in failure results in success, like Don Quixote fighting a windmill and being praised rather than thrown into an institution. With tragedy, something that should result in success end in failure, like Willy Lohman going to his boss to ask for a raise and he ends up getting fired.

Dramatic irony occurs when the audience knows something the characters (or a character) don't. One of the most classic examples of dramatic irony is the end of Romeo and Juliet: the audience knows that Juliet isn't really dead, but Romeo believes it and kills himself. In Oedipus Rex, the audience knows that Oedipus accidentally married his mother but he and the others have to discover it on their own. While dramatic irony is more prevalent in tragedy, it is also used in comedy: in School for Scandal, Peter confronts his adopted son Joseph of his suspicions that Joseph's brother Charles is having affair with Lady Teazle, Peter's lover... while Lady Teazle is hiding behind the curtain, as she is having an affair with Joseph. 

Ironic devices

Amphibology: when punctuation is left out of a clause to give a statement ambiguity
Medical services here--You won't get better; Wanted: chair for a person with a wooden leg.

Antanagoge: where a negative point is balanced with a positive point.
Yes, I know I've lost my job, but I'm so looking forward to spending time at home.

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Works Referenced
​8-Bit Philosophy. "What is Reality." Wisecrack, 27 April 2014, youtu.be/lVDaSgyi3xE
Cervantes Saaverda, Miguel de. Don Quixote de La Mancha ​(1605). Borders Classics, 2003.
The Great Dictator. Directed by and featuring Charlie Chaplin. United Artists, 1940.
In the Navy. Directed by Arthur Lubin, featuring Bud Abbott and Lo Costello. Universal, 1945.
Lewis, C.S. The Lion, the Witch, and the Wardrobe (1950). HarperCollins, 2002.
"Little Old Lady." The Abbott and Costello Show, season 1, episode 23. T.C.A. Productions, 1953.
Miller, Arthur. Death of a Salesman (1949). Penguin, 1999.The Naughty Nineties. Directed by Jean Yarbrough, featuring Bud Abbott and Lou Costello. Universal, 1945.
Orwell, George. Animal Farm (1946). Harcourt Brace, 1997.
Plato. "The Allegory of the Cave" (c. 380 BCE). Republic, Book VII, translated by Thomas Sheehan. Stanford University, accessed 16 April 2017, web.stanford.edu/class/ihum40/cave
Shakespeare, William. As You Like It ​(1623), edited by Barbara A. Mowat and Paul Werstein. Folger Shakespeare Library, 2014.
- - -. Much Ado About Nothing ​(1623), edited by Barbara A. Mowat and Paul Werstein. Folger Shakespeare Library, 2014.
- - -. Richard III ​(1623), edited by Barbara A. Mowat and Paul Werstein. Folger Shakespeare Library, 2014.
- - -. The Tragedy of Romeo and Juliet ​(1623), edited by Barbara A. Mowat and Paul Werstein. Folger Shakespeare Library, 2014.
Sheridan, Richard Brinsley. The School for Scandal (1777). The Broadview Anthology of British Literature, Vol. 3, edited by Joseph Black, et al. Broadview Press, 2006, pp. 755-798.
Sophocles. Oedipus Rex (429 BCE), translated by Sir George Young. Dover, 1991.
Stowe, Harriett Beecher. Uncle Tom's Cabin, or Life Among the Lowly (1852). Modern Library, 2001.