Quote 1
[The Master Horse] replied, "that I must needs be mistaken, or that I said the thing which was not;" for they have no word in their language to express lying or falsehood. "He knew it was impossible that there could be a country beyond the sea, or that a parcel of brutes could move a wooden vessel whither they pleased upon water. He was sure no Houyhnhnm alive could make such a vessel, nor would trust Yahoos to manage it." (4.3.4)
Master Horse is so shocked by Gulliver's stories of countries beyond the ocean that he actually imagines that Gulliver is lying – something that the Houyhnhnms could not previously think of. You say that the Master Horse has bit of cognitive dissonance, here, meaning he's hearing something that totally doesn't fit into his worldview. It's interesting to watch this happen to someone other than Gulliver for once.
Quote 2
For [the Master Horse] argued thus: "that the use of speech was to make us understand one another, and to receive information of facts; now, if any one said the thing which was not, these ends were defeated, because I cannot properly be said to understand him; and I am so far from receiving information, that he leaves me worse than in ignorance; for I am led to believe a thing black, when it is white, and short, when it is long." And these were all the notions he had concerning that faculty of lying, so perfectly well understood, and so universally practised, among human creatures. (4.4.1)
The reason the Master Horse thinks that lying is impossible or against reason is because the point of speech is to communicate what you think. Why else would you talk? So, the thought of talking to obscure what you think seems totally inconceivable to the Master Horse.
Quote 3
He said, "he had been very seriously considering my whole story, as far as it related both to myself and my country; that he looked upon us as a sort of animals, to whose share, by what accident he could not conjecture, some small pittance of reason had fallen, whereof we made no other use, than by its assistance, to aggravate our natural corruptions, and to acquire new ones, which nature had not given us; that we disarmed ourselves of the few abilities she had bestowed; had been very successful in multiplying our original wants, and seemed to spend our whole lives in vain endeavours to supply them by our own inventions; that, as to myself, it was manifest I had neither the strength nor agility of a common Yahoo. (4.7.4)
The Master Horse thinks that the "reason" that Gulliver says European Yahoos have is really just a new kind of vice, allowing Yahoos to cheat, lie, and steal on a grander scale. And in order to practice this fake rationality, European Yahoos have given up the few natural gifts (long nails, hair to protect us from the sun) that humans have. So, what's the point of human politics and society? Does Gulliver give any kind of credit to human civilization? Do you think the book wants us to agree with Gulliver's assessment?