The statement that best describes how dramatic irony is used in this passage is:
The reader knows that Mr. Pilkington is praising a flawed and brutal system.
In this excerpt, Mr. Pilkington speaks highly of Animal Farm and its supposed orderliness and efficiency, but the reader is aware that the conditions on the farm are actually harsh and oppressive, with the pigs exploiting the other animals. This creates dramatic irony, as Mr. Pilkington's praise is misplaced and reveals his ignorance of the true state of affairs.