How does Othello misinterpret the dialogue between Cassio and Iago? How might an observant person realize that Cassio is speaking of Bianca rather than Desdemona?

Cassio announces that he is going to torment Othello by asking Cassio about Bianca; he knows that Othello will assume that he is talking about his wife.

Now will I question Cassio of Bianca,

A huswife that by selling her desires

Buys herself bread and clothes. It is a creature

That dotes on Cassio, as ’tis the strumpet’s plague

To beguile many and be beguiled by one.

He, when he hears of her, cannot refrain

From the excess of laughter. Here he comes.

As he shall smile, Othello shall go mad.

And his unbookish jealousy must construe

Poor Cassio’s smiles, gestures, and light behavior

Quite in the wrong.—How do you now, lieutenant?