The plot event that best illustrates the difference between the narrator's expectations and the reality is: The inhabitants give the narrator a beautiful flower chain.
Situational Irony occurs when the opposite of an expected event is the case. In the statement by the author, the impression is that the people did not appreciate his efforts in creating the Time Machine.
This judgment will, however, be false if the inhabitants gave the narrator a beautiful flower chain in appreciation of his efforts.
So, this best illustrates the difference between the narrator's expectations and reality.
Learn more about situational irony here:
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