Gingy: OK, OK...I'll tell you. Do you know the Muffin Man?
Lord Farquaad: The Muffin Man?
Gingy: The Muffin Man.
Lord Farquaad: Yes, I know the Muffin Man. Who lives on Drury Lane?
Gingy: Well...she's married to...the Muffin Man.
Lord Farquaad: The Muffin Man?
Gingy: The Muffin Man!
Lord Farquaad: She's married to the Muffin Man?
Pinocchio: I'm not a puppet, I'm a real boy!
Captain of Guards: Five shillings for the possessed toy. Take it away.
Donkey: This is gonna be fun! We can stay up late, swap manly stories, and in the morning, I'm making waffles!
Donkey: And then one time I ate some rotten berries. Man, there were some strong gases seepin' outta my butt that day!
Donkey: Hi, Princess!
Princess Fiona: It talks!
Shrek: Yeah, it's getting him to shut up that's the trick.
Donkey: You, uh... You don't entertain much, do you?
Shrek: I like my privacy.
Donkey: Y'know, me too. That's another thing we have in common. I hate it when you've got someone in your face, you try to give someone a hint and they won't leave, and then there's that big awkward silence... [big awkward silence.].
Shrek: Donkey! Two things, OK? Shut. Up.
Farquaad: The winner shall have the honor - no, no, the privilege - to go forth and rescue the lovely Princess Fiona from the fiery keep of the dragon! If, for any reason, the winner is unsuccessful, the first runner-up will take his place. And so on, and so forth. Some of you may die, but it's a sacrifice I am willing to make. Let the tournament begin!
Chosen answer: Who is "everyone"? The only person surprised he can talk is the one human who is processing the fairytale creatures for banishment, and this was used as a plot device to highlight a joke (between him flying and talking).
MovieFan612 ★
Fiona also says "it talks", after he "saves his ass."
To be fair, she was locked in a castle for the majority of her life, so she wouldn't know that donkeys would be able to talk.
And yet he wasn't the only one surprised by it; watch the scene again and Fiona was surprised, too.