Through several insightful comments, the audience is left to hypothesize that Feste may have discerned Viola's true gender. Unlike Olivia, Orsino, and the others, Viola knows that Feste is anything but a fool; as she later says of Feste, "The fellow is wise enough to play the fool, and to do that well craves a kind of wit." (Act 3, scene 1, line 59).
Viola and Feste continue to verbally spar with each other until Viola tires of it. She claims that, "They who dally nicely with / words may quickly make them wanton."(Act 3, scene 1, line 14). After more playful deliberations about Feste's job title as Olivia's fool, he leaves to call Olivia. However, before he leaves he taunts Viola for not having a beard, possibly making a final allusion to her true gender. .
While Viola is waiting in the garden, Sir Toby and Sir Andrew enter and greet her. Sir Andrew addresses Viola in French. He is just trying to assert his superiority and assumes that the boy will not understand him. Sir Andrew is impressed when Viola thwarts him by responding in French. Having used up the little French he knows, he is barely able to formulate an appropriate answer in English. Sir Toby steps in and asks Viola to enter the house. Just as she is about to enter the house, Olivia and Maria come out.
Viola's attention abruptly focuses on Olivia as she formally greets the countess. This refined way of greeting Olivia impresses Sir Andrew even more than Viola speaking French. Viola continues to flatter Olivia with formalities and is carefully observed by Sir Andrew. All the while, Sir Andrew is providing comic relief by flustering at all of Viola's flatteries and Olivia's favorable responses. Just as Sir Andrew is about to top Viola, Olivia orders everyone to leave except for Viola/Cesario. This reinforces the assumption that Olivia is in love with Cesario.
The action is then transferred to Olivia and Viola's dialogue.