What does よく do when used with ~のほうが? Is the よく required? What does it mean in this context?
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よく here means "well." It functions as an adverb. It's not required, but it gives more insight about how "well" she knows about it.
Uh, my wife knows it well.
More context is needed for a better translation because using ほう implies a two-sided comparison. Plus, we don't know whose wife she is, so I just arbitrarily chose "my" for the translation.
Note that よく could also mean "often" depending on the context, see this thread for more details.
Well (I don't know), my wife knows it better (than I do).
「さあ」 can mean "now (let's...)", but it can also mean/imply "I don't know", eg 「これ何？」「さあね。」("What's this?" "Who knows.") So here it implies that the speaker doesn't really know.
Regarding the 妻, one usually refers to one's wife as 妻, 家内, 嫁さん, うちのやつ etc.
To refer to another's wife, one'd usually say (～の)奥さん.
よく means "(do something) well", so 妻がよく知っています would mean "My wife knows it well".
～のほうが adds a meaning "do ... compared to someone/something else".
So 妻のほうが知っています would mean "My wife knows, compared to me." ⇒ "My wife knows better than I do."
Is the よく required?
No, not really. 妻のほうが知っています would mean almost the same thing. よく might add a nuance of "in detail", perhaps?