Benedick asks Margaret to find Beatrice for him, and they exchange quips that have sexual overtones. Left alone, Benedick tries the song he has written for Beatrice, admitting that writing poetry is really beyond him.
Beatrice comes to him, curious about his challenge to Claudio. He says he is waiting for Claudio's response and quickly changes the conversation, asking her which of his "bad parts" she first fell in love with. She answers "for them all together" and asks him which "good parts" of her he first loved. They continue in this playful conversation until Ursula arrives, summoning Beatrice to her uncle. She tells them about Don John's plot, which misled both Don Pedro and Claudio. Benedick goes with them.
Margaret again shows herself to be a young woman with outspoken sexual attitudes, consistent with earlier exchanges with Hero and with Beatrice, and consistent with her unintentional involvement in Borachio's deception. We don't know whether Leonato has talked with her yet as a result of the preceding scene.
Beatrice and Benedick resume their earlier style of playful banter, simultaneously admitting and denying their love. Notice the difference in their use of the pronoun you/thou: Benedick now addresses her with the more intimate "thee" and "thou," while Beatrice remains slightly more remote with "you." Her responses to Benedick's openness about love are still guarded and tentative, probably because she has been hurt by him before and doesn't know whether his love is genuine this time.
Beatrice and Benedick finally learn that Don John was at the root of the denunciation of Hero, letting Borachio set up the window scene with Margaret. So Benedick confirms his initial reaction, and Beatrice must recognize that Benedick was right in his defense of Claudio and Don Pedro. Recognizing how Claudio and Don Pedro have been tricked may help her accept Claudio as a future kinsman in marriage.