Which of the following best describes the concept of dramatic irony?

Dramatic irony is best described as a situation where characters are unaware of the context or the true situation, while the audience is fully aware. This creates a contrast between what the characters perceive and what the audience knows to be true, which often leads to heightened tension or poignancy in the narrative.

In many literary works, this technique allows the audience to engage more deeply with the story, as they can anticipate outcomes and feel the weight of the characters' ignorance. For instance, in Shakespeare’s "Romeo and Juliet," the audience knows that Juliet is alive, while Romeo believes she is dead, which adds emotional depth to their tragic confrontation.

The other options don't align with the correct understanding of dramatic irony. Intentional exaggeration for effect refers to hyperbole, while humor related to audience understanding may refer more to comedic irony. A plot twist that resolves conflict does not specifically relate to dramatic irony, as it lacks the element of audience awareness against character ignorance.