I thank you; but I assure you you are quite mistaken. Mr. Elton and I are very good friends, and nothing more;” and she walked on, amusing herself in the consideration of the blunders which often arise from a partial knowledge of circumstances, of the mistakes which people of high pretensions to judgment are for ever falling into.

This passage is a prime example of Austen’s iconic and ironic comedy. Emma’s brother-in-law, John Knightley, warns her that Mr. Elton is pursuing her romantically, and that Emma’s conduct toward him is so welcoming that Elton feels assured that she returns his feelings. Emma is so completely certain of Mr. Elton’s interest in Harriet that she doesn’t give John’s idea a second thought, and even laughs at him secretly, amused by people who make judgments and mistakes because they don’t know as much as they believe themselves to know. Of course, the irony here is that this description perfectly fits Emma herself, not John Knightley, who is indeed correct about Mr. Elton’s intentions. Elton has no interest in Harriet and has set his sights on Emma, but Emma is so wrapped up in her own fantasies and fancies that she cannot see the truth.

How could she have been so deceived!--He protested that he had never thought seriously of Harriet–never! She looked back as well as she could; but it was all confusion. She had taken up the idea, she supposed, and made everything bend to it.
 

After Mr. Elton proposes to Emma and reveals that he never cared for Harriet, Emma realizes that she has let her fantasies get the better of her. Emma desperately wanted Mr. Elton to be in love with Harriet, so she “made everything bend” to this hope by assuming all of Mr. Elton’s behaviors pointed toward the conclusion she was biased in favor of. Mr. Elton gave Emma a flirtatious riddle, and told her it was not for Harriet’s book, and yet Emma still assumed he meant he was courting Harriet. Mr. Elton fawned over Emma’s artistic skills and rode to London to frame her painting, and yet Emma assumed he was admiring the subject of the painting, not the artist. There was plenty of evidence against Mr. Elton having feelings for Harriet, but Emma wasn’t able to see any of it.

She was, in fact, beginning very much to wonder that she had ever thought him pleasing at all; and his sight was so inseparably connected with some very disagreeable feelings, that except in a moral light, as a penance, a lesson, a source of profitable humiliation to her own mind, she would have been thankful to be assured of never seeing him again.
 

After Mr. Elton professes his love to Emma and her hopes for Harriet making a match with him are shattered, Emma begins to see just how displeasing Mr. Elton actually is. When she wanted him to marry Harriet, Emma had been willing to brush aside Mr. Elton’s annoying qualities and try to find the good in any questionable behavior, but once he proposes to her, she begins to see the truth. She realizes his flattery of women, including herself, is not at all genuine – he wishes only to raise his own class status by marrying up, and has no real romantic interest in her despite his proposal. She begins to see his cruel and unfeeling qualities – he doesn’t care one bit about Harriet as a person, just as an appendage to Emma. Finally, she notices how odious Mr. Elton’s behavior is – he sucks up to wealthy people and openly insults those he finds lesser than him.

At present she could not doubt his having a decidedly warm admiration, a conscious preference of herself; and this persuasion, joined to all the rest, made her think that she must be a little in love with him, in spite of every previous determination against it.

Emma wants to be in love with Frank Churchill, so she convinces herself that she is. The wealthy and charming Frank Churchill has always been a source of mystery and excitement in Highbury, and Emma suspects that the Westons hope the two young people might become a couple, and so when Frank Churchill proves to be just as amiable and handsome as rumor had it, Emma believes that this is her chance to finally be in love. On paper, their coupling is perfect – both rich, beautiful, and intelligent, they make an obvious pair. Emma may have a bit of a crush on Frank, but someone who needs to convince themselves that they are in love is likely not in love. Emma is simply attempting to manipulate her own self into believing that she loves Frank. By contrast, her realization that she loves Mr. Knightley comes with absolutely no doubt, no convincing, and no struggle.