The statement that best describes how dramatic irony is used in this passage is:
The reader knows that the information Mr. Pilkington shares about the farm is incorrect.
This is because, while Mr. Pilkington is praising the operations of Animal Farm, the reader is aware of the realities of life on the farm, including the exploitation and suffering of the animals, which contradicts his claims of orderliness and productivity. This creates a sense of dramatic irony, as the audience understands the true conditions while the characters in the passage remain oblivious.