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An irony plays around with words such that the meaning of a sentence or word is different from the literal meaning. The sentence has a different meaning or intention than it seems. Sometimes it looks like sarcasm, but sarcasm is used to hurt someone. An irony isn't meant to hurt someone.

Irony has three types: verbal irony, situational irony and dramatic irony.

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Someone says the opposite of what they really mean or intend.
1. 'Oh! What a fine luck I have!', said Mark.

If you read this sentence you might think Mark is very happy with their luck. But it actually means that Mark is very unhappy and doesn't have any luck at all.

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Actions or events have the opposite results from what is expected or intended.
2. A fire station in Amsterdam has been burned down.

This is very unexpected because you would assume that firefighters are able to keep their building save from fire because it is their job.

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In a lot of stories you can spot irony. Writers use irony to develop the interest of the reader. When the reader is interested he wants to continue reading. It also forces the reader to use his imagination to understand the underlying meanings of a text.

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The readers of a text know something that the characters do not know (yet).
3. The reader knows that the thief is hidden in the closet.

The reader knows where the thief is hidden. The characters in the story have now idea where the thief could be.