I think what they are going for is you know all your secrets and insecurities. You might know what you look like before make up, or as you decompress from a hard day of work. You might wear baggy shirt to cover a small belly. You might wear flowing dresses because you don't like your ass.
You compare that to people who wear yoga pants because they are proud of their ass. Or people who spent 45 minutes doing their hair and makeup that morning. You might see a guy with his shirt off because he spent hours in the gym working on his abs.
You know how you act/look your worst at home alone. You compare to how others look when they are out in public and dressed to impress.
The counterpoint to this is you often give yourself a break when you do something bad because you know your intentions and character, but other people get judged without that benefit. Being a person is complicated.
I'd also extend it to mental and psychological state
We may feel guilty about feelings and choices that are normal and common. We only see the actions of other people and we only hear what they say out loud. We know how we feel deep inside but we aren't privy to that level of insight for other people.
We might feel that we are better or worse than other people as a result, when in reality we're likely similar
I think it can be understood in two ways. We see the lives others present and compare them to our own, but other people are showing the best things in their live and may be exaggerating the good and trying to hide the bad.
On the other hand, I've heard the saying "we judge others for their actions and ourselves for our intentions." When we see others do bad things, we just think they are bad people, but when we do bad things we tell ourselves we may more often blame circumstances.