From Ginny Wiehardt,
Your Guide to Fiction Writing.
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Definition: As anyone who has seen Reality Bites knows, irony is the incongruity between what is expected and what actually occurs. "The American Heritage Dictionary" expands the definition to include "The use of words to express something different from and often opposite to their literal meaning." Related to irony, sarcasm is a remark meant to wound or hurt the recipient. Facetiousness is the more playful, benign brand of sarcasm.

Examples: Alanis Morissette fans beware: her understanding of irony is not the most reliable. Rain on your wedding day, for instance, is not ironic, it's just unfortunate.