Mrs Grundy is a figurative name for an extremely conventional or priggish person, a personification of the tyranny of conventional propriety. A tendency to be overly fearful of what the respectable might think is also referred to as grundyism.
Although she began life as a minor character in Thomas Morton's play Speed the Plough (1798), Mrs Grundy was eventually so well established in the public imagination that Samuel Butler, in his novel Erewhon, could refer to her in the form of an anagram (as the goddess Ydgrun). As a figure of speech she can be found throughout European literature.
Curiously for so famous a character, Mrs Grundy never actually appears in the play which introduced her, but is the continual object of the boastful Dame Ashfield's envious watchfulness, as is shown in the very first scene:
Ashfield. Well, Dame, welcome whoam. What news does thee bring vrom market?
Dame. What news, husband? What I always told you; that Farmer Grundy's wheat brought five shillings a quarter more than ours did.
Ash. All the better vor he.
Dame. Ah! the sun seems to shine on purpose for him.
Ash. Come, come, missus, as thee hast not the grace to thank God for prosperous times, dan't thee grumble when they be unkindly a bit.
Dame. And I assure you, Dame Grundy's butter was quite the crack of the market.
Ash. Be quiet, woolye? aleways ding, dinging Dame Grundy into my ears — what will Mrs Grundy zay? What will Mrs Grundy think — Canst thee be quiet, let ur alone, and behave thyzel pratty?
Dame. Certainly I can — I'll tell thee, Tummas, what she said at church last Sunday.
Ash. Canst thee tell what parson zaid? Noa — Then I'll tell thee — A' zaid that envy were as foul a weed as grows, and cankers all wholesome plants that be near it — that's what a' zaid.
Dame. And do you think I envy Mrs Grundy indeed?
Although later usage positions her chiefly as a feared dispenser of disapproval, the Mrs Grundy of the play is, in Dame Ashfield's daydreams, not so much a figure of dread as a cowed audience to the accomplishments of the Ashfield family. As the play progresses, Dame Ashfield and her comical musings soon drop from sight to make way for melodrama:
Miss B. Ah! (Shrieks.) Thank Heaven, he's safe! What urged you, Henry, again to venture in the Castle?
Henry. Fate! the desperate attempt of a desperate man!
Sir Philip. Ah!
Henry. Yes; the mystery is developed. In vain the massy bars, cemented with their cankerous rust, opposed my entrance — in vain the heated suffocating damps enveloped me — in vain the hungry flames flashed their vengeance round me! What could oppose a man struggling to know his fate? I forced the doors, a firebrand was my guide, and among many evidences of blood and guilt, I found — these! (Produces a knife and bloody cloth.)
A real Mrs Grundy
During the reign of William IV (reigned 1830-1837) a Mrs Sarah Hannah Grundy (1 January 1804 – 30 December 1863) was employed as Deputy Housekeeper at Hampton Court Palace one of Henry VIII of England's most famous residences. Her husband, John Grundy (1798/1799 – August 1861), was keeper of the State apartments. Mrs Grundy became Head Housekeeper on 22 April 1838, a year after Queen Victoria ascended to the throne, and she served in that position until 1863 when she retired. Her duties included the care of the chapel at Hampton Court.
Royal families stopped using Hampton Court as a residence in 1737, and from the 1760s onward, it was divided up for "grace-and-favour" residents who were granted rent-free accommodation in return for great service to the Crown or country. These private rooms numbered in the hundreds. Much is revealed about the Victorian ladies living at Hampton Court Palace through their letters, particularly their correspondence to the Lord Chamberlain's Office as the Ladies attempted to get around the regulations — to exchange their apartments for better ones, to sub-let their apartments for profit, to keep dogs, or other matters of convenience. Equally revealing are the letters from the Housekeepers to the Lord Chamberlain, complaining about the Ladies' behaviour.
This excerpt from an Australian newspaper reveals the possibility that Hampton Court's Mrs Grundy was a real-life moral regulator who had an impact upon London society, or at least upon the residents of Hampton Court:
Ernest Law, chief historian of Hampton Court, points out that a "Mrs Grundy" did really exist. "That lady was, as a fact, embodied in the housekeeper of that name at Hampton Court Palace in the late 'forties and early 'fifties of last century. Her fame is perpetuated in a dark space — one of the mystery chambers of the palace — the door of which is rarely opened, and which is still known as 'Mrs Grundy's Gallery.' Here she impounded any picture or sculpture which she considered unfit for exhibition in the State rooms; and here she kept them under lock and key in defiance of the authority and protests of the Queen's surveyor of pictures. The story goes that on one occasion the First Commissioner of Works, on a visit of inspection, sent for Mrs Grundy. In answer to the First Commissioner's request, she declined to open the door for him. It was not until the early 1900s that a leaden statue of Venus, which had been sent from Windsor, and was stored in Mrs Grundy's Gallery, was brought forth to adorn Henry VIII's pond garden. "What would Mrs Grundy say?" 
C. S. Lewis's character Mark Studdock in That Hideous Strength refers to her in a ghost-written article for an unnamed British periodical. "If you hear anyone talking about the liberties of England, by which he means the liberties of the obscurantists, the Mrs. Grundy's, the bishops, and the capitalists, watch that man; he's the enemy."
Jack London uses Mrs Grundy in his book The People of the Abyss to describe the early twentieth century attitude of the English working class towards drunkenness: "Mrs Grundy rules as supremely over the workers as she does over the bourgeoisie; but in the case of the workers, the one thing she does not frown upon is the public house ... Mrs Grundy drew the line at spirits."
Louisa May Alcott alludes to Mrs Grundy in her book Little Women when speaking of the changes Laurie undergoes as a result of Amy's admonitions to him (1868).
Thomas Hardy disparages the "Grundyist" in his essay "Candour in English Fiction" (1890).
Mrs Grundy was satirized in the advice book for teens, Mrs Grundy is Dead (New York: Century, 1930).
Walter Lippmann dismisses the "exploded pretensions of Mr and Mrs Grundy" in his A Preface to Politics (1913).
On the television show Absolutely Fabulous, a character Saffie is called a Mrs Grundy by Patsy.
A long-time character in Archie Comics is the teacher Miss Grundy. When first introduced, she fit the Mrs Grundy archetype well, being judgmental and old-fashioned. However, the character has been softened considerably over the years, and her current incarnation is not particularly Grundyesque.
P G Wodehouse's lyrics to the song "Till the Clouds Roll By" from the musical Oh Boy! contain the line "What would Mrs Grundy say" in Verse 1.
H. G. Wells's character Ewart in the novel Tono-Bungay, during a long dialogue about the Grundys says, "There's no Mrs Grundy." (book 1 chapter 4, section iii)