"And we were in our own eyes as grasshoppers, and so were we in their eyes" (Num 13:33). The Holy One said to the scouts: You don't know what you have just let your mouths utter. I am ready to put up with you saying "We were in our own eyes as grasshoppers". But I do take offense at your assserting, "and so were we in their eyes". Could you possibly know how I made you appear in their eyes? How do you know but that in their eyes you were like angels?
The way I interperet this mishna is as follows. All of us have a perception of ourselves, but more importantly all us make assumptions about how others perceive us. Although empowering giving us a sense of balance and place, this can be very damaging. We often have a tendency to imagine that people think us of little worth, conjuring up in minds all conversations that people must be having with themselves about something we did or did not do. The reality is that we are often so off the mark with these illusions that we become our worst enemy, making mountains out of mole hills and inflicting apon ourselves endless suffering. 1% of pain comes from reality, 99% of pain comes from ourselves. The mishna is teaching us to assume that people think of us positively, not to do so is not only a sin against ourselves but against Hashem himself.