Austen uses Mrs. Palmer because she is one of the most entertaining and funny characters in the novel because she always seems so clueless, whether connsciencious or unconscious its hard to tell. In this passage, it is clear that she know next to nothing concerning Willoughby but that won't stop her from talking about him, as though they were intimately acquainted. It also gives the novel a sense of how society worked .The small-town setting often carries the thought of "everyone knows everyone", even when, in truth, it is is rarely possible. It also lends a chance of foreshadowing as Willoughby is well-known around the area, although in what context it is uncertain.
