I mean, from watching Phantom Menace, for all we know a Sith is simply the name of Darth Maul's species.
Only a staggering idiot could possibly think this. Exhibit A: Darth Sidious. Exhibit B: HE'S THE FUCKING EMPEROR.
It would be nice to get a little dialogue explaining that the Sith are like Jedi, but they embrace anger and fear instead of compassion.
We got plenty of that in the conversation between Anakin and Sidious in Episode III. Where is was appropriate for Anakin and the audience to be finding out about the Sith together. Remember how it's the "Phantom" Menace in movie 1? A scene like you refer to wouldn't have been awful (the movie's packed with filler, what's another 30 seconds) but it's certainly not true that it was necessary.
Seriously, a lot of small children watched this movie and suffered none of the staggering confusion that you allude to. Perhaps George Lucas is simply not in the business of catering to people who can't figure out what a black robe, a red lightsabre, and a desire to kill Jedi all mean.
By the way, most of you seem to have missed HOW MUCH information is conveyed in the Jedi Council scene in Episode I with VERY economical dialogue. Paraphrased below:
Qui-Gon: I believe our attacker was a Sith Lord.
Ki-Adi-Mundi: Impossible. The Sith have been extinct for a millenium.
Mace Windu: I do not believe the Sith could have returned without our knowledge.
Yoda: Hard to see, the dark side is.
Mace Windu: We will devote all our efforts to uncovering the mystery of this attacker.
WHAT WE'VE LEARNED
-The Jedi defeated the Sith long ago (strongly implied)
-The Jedi are terribly arrogant.
-Qui-Gon is perceptive (after all he is absolutely right)
-Yoda is sharper and less arrogant than the rest of the Jedi.
-Conversely, the rest of the Jedi defer to him.
-One report from Q-G and one cautionary word from Yoda and the Jedi Council is launching an investigation. They don't quite buy it, clearly, but they are treating the threat of the Sith very seriously.
-The Jedi have no idea that a Dark Lord of the Sith lives down the block. Yoda is right, the dark side is damn hard to see.
Notice how all of these are plot points or motifs that play into the next two movies?
Notice how they were effortlessly established in five lines?
If you want to find out about the history of the Sith, George Lucas will sell you a book about them. He didn't need to make this scene LESS economical, especially since the second part of the scene is about Anakin, and then we get two more scenes with the Jedi Council that establish essential plot points.