The answer is to dig out.
There is a conflict between rumor and reality in this excerpt.
On one hand, we have the rumor - that Nick became engaged to someone, and everybody heard it was true. However, on the other hand, we have the reality - that he in fact is not engaged, thus the whole story is just a gossip rather than something that actually happened.
Answer:
The passages show how people often did not know or understand the extent of Trujillo’s deceit.
