This is both the most obvious and difficult concept to grasp here; we often make the very same mistake that the characters do of believing that physical beauty means inner goodness. In some cases, this assumption seems to hold true (for example, Sibyl Vane), while in Dorian's case, it's obviously very, very false. Appearances here are meant to be misleading, and they give the characters an added sense of mystery; physical appearance is like a mask that hides the real contents of each character's soul.
There's nowhere our omniscient narrator won't go, and we get to hear the thoughts and opinions of pretty much every character we encounter. Dorian, of course, is the main focus of our eavesdropping, but we also usefully get to hear Lord Henry's thoughts, which inform us of his rather dastardly philosophical experiment with Dorian. Wilde also uses thoughts and opinions to get us to either like or dislike characters; good examples are the members of the Vane family. We instantly like Sibyl because of her artless, joyful approach to life, and her brother James, though less appealing, is a sympathetic character because of his intense loyalty to his sister. Their mother, however, is ridiculous and unappealing because of her trite, overly theatrical, foolish opinions.
This doesn't apply to everyone, but there are certainly some characters whose names are very significant. First of all, Sibyl Vane's name can be broken down into two component parts: "sibyl" means prophetess, which kind of is true, if you think about it – Dorian's treatment of Sibyl "predicts" in a way all the relationships that will follow. "Vane," her family name, applies more clearly to her mother, Mrs. Vane – or rather, Mrs. Vain. Her vanity is apparent in all of her words and thoughts, and we can't help but be repelled by it.
The most important name here, however, is Dorian Gray. "Dorian" links him to ancient Greek culture, which Lord Henry upholds as the high point of human civilization. It also has a double meaning – it's linked etymologically to "gold" and "golden" (think El Dorado), like Dorian's appearance. Finally, "Gray" is a more obvious one – Dorian occupies a moral gray area, and his transformation from good to evil mostly takes place in limbo.