"Far more fair than black" - this is a reference to the type of character and mannerisms Othello as opposed to his outward appearance.
It basically compares his virtues of truth and trustworthiness to that of a white or "fair" person. This statement is given magnitude by the fact that it is comparing people of different race, one of which is considered to be "evil" (Othello being of the non-Venetian race).
The reason I say evil is not necessarily to say that Othello is a bad person, rather people perceive him in that way.
He is "the Other". In the eyes of an Elizabethan, he would be attached to certain preconceptions, based on the little knowledge Elizabethans had of outsiders.
For example, Othello is accused of having used magic spells to win Desdemona. An Elizabethan person (Brabantio) would make this assumption based on the fact that his culture does not have magic, therefore, "the Other" MUST have magic.
Hope this helps a bit.