too good

I'm not sure if I know the story you are referring to, but I believe he is speaking about a person who betrayed his native England, and has thus far escaped suspicion. This individual had access to state secrets, but was spying for Germany. The brilliant detective had discovered the spy, and was beginning to reveal to Watson the enormity of betrayal committed by the traitor.

Yes, probably, WB. However as suggested above by Glit, to be sure one would have to read the story

Von Bork, the man on the sofa, was a German agent who operated a network of spies, and who was too good (clever) for the British counter-intelligence agencies (our people), who were unable to discover his identity, but not too clever for Holmes.

No villain escaped when Holmes was on the case. My favorite Holmes series is still the version with Jeremy Britt as Holmes. Although I am fascinated with "Elementary" which I expected to hate. It's a gussied up modern version, but I think very well done.

Thank you~ especially Contrex~

Yea WB, the fella amazes me

No. It's to be taken literally.
"...a bit too good for.." means "a bit better than".

I hate to nitpick, but it appears to me that Holmes is saying the German believes he is superior to the English. Ergo 'too good'.

Thank you~

You are picking a non-existent nit, or rather mis-interpreting what Doyle made Holmes say. Used sarcastically, 'too good or 'thinks he is too good', can imply snobbish imagined superiority, however Holmes is clearly saying that Von Bork was too good at evading detection for the British to catch him. He did not 'think he was too good' for them.

The expression 'too good for' is very common, certainly in UK and British Commonwealth English, to mean 'too capable/cunning/fast/strong [etc]', in adversarial or competitive contexts, especially in sport.

South African cricket captain speaking of Virat Kohli, star player of the India team which roundly beat South Africa: "He was fantastic. We all know how good Virat is and he was the real danger. He paced his innings well and played some good shots. He was too good for us".

Peter Borren: (Netherlands cricket captain): South Africa were too good for us.

All Blacks (NZ Rugby team) still too good for us – Meyer (SA Rugby captain)

Chelsea (soccer team) are too good for us, admits Roberto Mancini, But Italian denies Mourinho has better record

Swifts were too good for us today but it was amazing to play in front of 10,000+ netball supporters.

Fernando Alonso has given an honest appraisal why Ferrari have failed in their fight with Red Bull, conceding: "They're just too good for us."