Valentine informs the Duke Orsino about how Olivia's answer was a rejection. The Duke continues persuing her, and later orders Cesario to talk to her and get her to return his affections. This portrays the Duke as a determined and perseverant character.
So please my lord, I might not be admitted; But from her handmaid I do return this answer.
Viola immediately realizes that Olivia is smitten with her when the latter gives her a ring, which shows Viola as an intelligent and quick character.
I left no ring with her; what means this lady? Fortune forbid my outside have not charmed her! She made good view of me; indeed so much that sure methought her eyes had lost her tongue, for did she speak in starts distractedly. She loves me, sure.
Maria decides to trick Malvolio with a fake love letter from "Olivia" with the help of Sir Andrew and Sir Toby. This shows she is mischevious and cunning.
I can write very like my lady, your niece; on a forgotten matter we can hardly make distinction of our hands.
Sir Toby is characterized as being rude and disrespectful. Olivia, Maria, and Malvolio are clearly annoyed by his brutish behaviour, and it is most visible in this scene.
For the love o' God, peace!
My masters, are you mad, or what are you? Have you no wit, nor honesty, but to grabble like trinkers at this time of night?
Malvolio is reading the letter Maria writes him under the pretense of being Olivia and daydreams about her being his wife. This shows that he is egotistical and easily manipulated.
I will smile. I will do everything thou wilt have me.
I thank my stars, I am happy. I will be strange, stoute, in yellow stockings, and cross-gartered.
Olivia meets Cesario (Viola) For the first time. Though she constantly rejected the Duke under the pretense she was still mourning her brother, she immediately falls for Cesario's looks, which characterises her as a liable - or fickle - person.
Methinks I feel this youth's perfections, with an invisible subtle seath to creep in at mine eyes.