The baker's wife is hardly the moral centre of the story. She encourage's her husband further and further away from his moral instincts. She has an opportunity to redeem herself in finding Jack and protecting him from the witch and the giant. It is in this task that she gets distracted. She is seduced by a Prince and left with her guilt. He does his best to leave the wife with as little guilt as possible. He is clearly the louse. His departing words make it clear that he was hers for just a moment. 'Moment', in fact, seems to be his favourite word. It is so open to manipulation. The wife then uses faulty logic to wrestle with her morals. And faulty logic always wins.
Questions of "Was it wrong?" and "Am I mad?" quickly make way for more important matters, such as "Is that all? Does he miss me?" She then shakes it off and makes the understatement of the year. "It's not beseeming." So why is it not beseeming? She is in the woods, and the woods are certainly not beseeming, so it must be the woods' fault. Now we're not going to recover from this. She has decided that it is because of the woods, where you can't live, because "there are vows, there are ties, there are needs, there are standards, there are shouldn'ts and shoulds." You might not see what any of this has to do with the woods, but even if she didn't believe it at the time, the wife still has in her head the Prince's words: "Right and wrong don't matter in the woods." Her subconscious is grasping onto this concept as it sees its way clear to an excuse. In her mind her indescretion is linked to the woods, and all she has to do is get out of the woods. But does she really want to go back?
The wife's next rationalization is that her life could have both. she actually contemplates using the "baker for bread". By bread she obviously means money. She'd still have her Prince for pleasure. She has clearly forgotten her earlier advise to herself that "If you know what you want then to get what you need better see that you keep what you have". For a while she seems willing to risk her relationship with the baker. She shakes this thought off on the pretence that it's wrong, but she probably just realised that the option is not available to her. It is amazing how easily you can lie to yourself when necessary. She then jumps right back to blaming the woods. Her fully animate enemy that none-the-less cannot fight back.
She tries to think about Jack and the giant but this doesn't last very long until she's back on topic. Now she adopts the Prince's word: It was "just a moment. One peculiar passing moment." She is determined to be okay with herself. If it was only a moment, then it is in the past, and maybe it will not have an effect on any other moments. But thankfully this is not the case. If she had lived she would probably have had to face up to her moment. As it was some good came of it, in that it allowed Cindy to reasess her relationship with her husband.
She finally asserts that it is the function of the woods to be the site for such moments, and that the experience, now over, may actually enhance her relationship with her husband. Here she is sadly deluded. If the woods are a symbol for adversity in this story, as I believe they are, then they are a test of character. The baker's wife clearly failed that test.
Find this theme in other Sondheim songs: