And dark in the dark old inn-yard a stable-wicket creaked Where Tim the ostler listened; his face was white and peaked; His eyes were hollows of madness, his hair like moldy hay,
Now, all of a sudden, we turn away from the couple we just met, and meet a third character. First we hear the creaking sound of a "stable-wicket" (that means a door or gate in a stable). Apparently someone is eavesdropping on the two lovers.
It turns out to be Tim, the ostler (the guy who takes care of the horses at an inn). Tim's a crazy-looking guy, with a pinched white face, insane eyes, and hair that looks like moldy hay.
But he loved the landlord's daughter, The landlord's red-lipped daughter, Dumb as a dog he listened, and he heard the robber say--
Crazy Tim is also in love with Bess, although it's hard to imagine he has much of a chance. The speaker mentions her "red lips" which helps to emphasize her sexiness and the contrast with poor Tim's white face.
As Tim listens to the highwayman, the speaker tells us he is "dumb as a dog." In this case "dumb" just means silent, but the comparison to a dog is no accident. We're definitely supposed to notice the difference between the beautiful lovers and this pathetic, ugly servant.