To me this paradox, "Fair is foul and foul is fair", means that things that may appear good, will become bad and things that are bad will soon enough become good. In relation to characters, i can clearly relate this quote back to Macbeth. This is because Macbeth may appear to be fair (being described as brave and nobel by Captain and Duncan), but there may be a part of him that is foul. This is discovered later in the play as soon as Macbeth meets with the witches. He hears from them and their predictions ("All hail Macbeth, that shalt be king hereafter." 1.2. Line 48) and it leads to him committing evil actions such as murdering a good and innocent King and all the lies and deception that follow.
This change of character that we see in Macbeth is an obvious depiction of the paradox, "Fair is foul and foul is fair."