We now come to a woman who runs a house of prostitution and thus is a vector for such disease. A “bawd” is a woman how manages prostitutes.
When she appears on stage, she has yet to be identified. Therefore, the characters must introduce us to her, seeing as she will be a character in a subplot. However, to just say she is a “bawd” would be terrible writing. Therefore, we come to know here by the characters doubling down of their puns about disease and Lucio’s ridicule of the First Gentlemen.
Enter ⌜Mistress Overdone, a⌝ Bawd.
 Behold, behold, where Madam Mitigation
 comes! I have purchased as many diseases under
 her roof as come to—
Lucio tells us who she is. Madam Mitigation is somewhat ambiguous, but her trade is plain with the statement that he has purchase diseases from her. But by saying that he has purchased disease, Lucio opens himself up to a return of the attacks he has been leveling on the other two. Second Gentlemen goes for the attack:
 To what, I pray?
 To three thousand dolors a year.
Dolors is a pun on dollars (money) and dolor (sorrow, pain). Lucio has been accused of spending a great deal on prostitutes and disease. The First Gentlemen seeks to join in on the attack upon Lucio
 Ay, and more.
Lucio turns the attack upon the First Gentlemen:
 A French crown more.
A French crown would be money (a crown), a crown for a king, and to the point, the loss of hair from venereal disease. Lucio must have made some sort of gesture with these lines which would steer the direction away from himself.
 Thou art always figuring diseases in
 me, but thou art full of error. I am sound.
The First Gentlemen is a poor player when it comes to abuse and jibes. He cannot turn it back on Lucio, but rather tries to defend himself. Lucio seeing weakness, lands his final blow:
 Nay, not, as one would say, healthy, but so sound
 as things that are hollow. Thy bones are hollow.
 Impiety has made a feast of thee.
A few things happen here: Lucio has gone from being the potential victim to the victor of the attacks. We also learn that Lucio has a vicious tongue and is willing to slander and attack for his own entertainment.
Thematically a couple of things happen here. First, the discussion of bones being hollow is again a reference to disease. By saying he is the victim of a feast, we have the image of worms who make a feast of one at death.
Second, we have been introduced to the horror of disease from a lack of chastity, but it has been done as a joke until this point.
Finally, Lucio returns another concept: Impiety. The scene began with the pirate who scratched on one of the Ten Commandments. They had given themselves the scratched commandment of thou shalt not murder, because they would engage in war for profit.
Lucio brings up the commandment which will be at issue in the play: Thou shalt not commit adultery, which would cover all sexual sin By breaking that commandment, the man has destroyed himself.
Lucio intends this as a joke and an insult. But that commandment’s breach is going to immediately lead to friend being held for execution for breach of that commandment. Thus, his friend will be not a feast for disease but for worms.
First Gentleman, ⌜to Bawd⌝
 How now, which of your
 hips has the most profound sciatica?
He wants to insult her. It is unlikely he intends any good. She will not play along
 Well, well. There’s one yonder arrested and
 carried to prison was worth five thousand of you all.
She turns the conversation and the play into a new direction. Notice that this exposition comes naturally into the course of the telling. She is the only character who knows the fact. She tells them something they do not know – and we do not know. She speaks in a way natural to her situation. They do not respect her. She has little respect for them. But the man she points out has nothing to do her and her trade.
 Who’s that, I pray thee?
 Marry, sir, that’s Claudio, Signior Claudio.
 Claudio to prison? ’Tis not so.
 Nay, but I know ’tis so. I saw him arrested, saw
 him carried away; and, which is more, within these
 three days his head to be chopped off.
This is straight exposition, usually the dullest part of a story. But here, the exposition, being new to us and to the characters moves the story along. It also ends with the most dramatic element: The certain death of Claudio.
 But, after all this fooling, I would not have it so!
 Art thou sure of this?
Lucio’s response does two things. First, it shows us that Lucio has some peculiar interest in the matter. The “gentlemen” don’t believe it. Lucio shows some emotion beyond surprise. Moreover, by challenging her truthfulness, it drags out more exposition
 I am too sure of it. And it is for getting Madam
 Julietta with child.
We now know the event which will drive the main plot: Claudio, an upstanding man, has gotten his girl friend, an upstanding woman (“Madam Julietta”) pregnant. He has been arrested (to the surprise of everyone) and will executed in three days.
A less skilled writer would have the Bawd merely blurt out: Look there is Claudio, he has been arrested for …. By William draws out these details in a natural conversation which is both gossipy and shocking.
At the beginning of this scene, Lucio was indistinguishable from his companions, except that he had better trained sense of insult. But now, with the news of Claudio’s arrest, Lucio direction has changed.
 Believe me, this may be. He promised to meet
 me two hours since, and he was ever precise in
Lucio praising Claudio. The only reason Lucio has been standing around talking smack with these two is he was waiting for Claudio. We also learn that Claudio has an honest character: He keeps his promises. Claudio’s crime will be against the woman (or with the woman) he had promised to marry.
 Besides, you know, it draws something
 near to the speech we had to such a purpose.
 But most of all agreeing with the
 Away. Let’s go learn the truth of it.
This last beat tells us there had been a general proclamation. We don’t know that there has been such an announcement or that Angelo has actually done anything yet. This last beat does move the action along, particularly with Lucio calling them to go. But I’m not sure it helps much. Lucio would natural go to see what happened to his. We will soon discover what happened from Claudio. We could probably drop these lines and if need be add Lucio’s call to move to the end of his previous lines. ⌜Lucio and Gentlemen⌝ exit