Hitchcock’s formulation remains the clearest: two people talking at a table is a scene, and the same two people talking with a bomb under the table that only the audience knows about is fifteen minutes of suspense. Nothing in the dialogue changed. The audience’s knowledge did all of it.
It is the most efficient tension device available, because it costs one earlier shot and buys tension across every subsequent scene involving the character who does not know. Its cost is that surprise is spent: you have traded a later reveal for sustained anxiety, and you cannot have both.
The usual mistake is hoarding information in the belief that a twist is more valuable. In most cases it is not. Ten seconds of surprise at the end is worth less than three minutes of dread before it, and dread is what people remember.
What is dramatic irony?
The audience knowing something a character does not. It converts ordinary scenes into tense ones without altering their content, because tension comes from the gap between what the viewer knows and what the character can act on.
Is it better to surprise the audience or let them know first?
Usually to let them know. Surprise pays once and briefly; dramatic irony pays across every scene until the character catches up. You can have one or the other, not both.