There's a lot about this in psychology. About the mirror reflection we get from others and how we are percieved to other's helps to shape our own ideas about who we are.

I think in understanding who you are, you need to at least in part look at how other people see you. If you think you're this funny/witty person and virtually everyone around you thinks otherwise... well you might be a little deluded in that aspect. But I find that a lot of times, people tell me, "oh you're so _____" when I honestly don't believe that's a characteristic of mine. So then I have to wonder if I'm deluded or if these other people just don't have a clue who I really am. I'm more inclined to believe the latter.

So basically, understanding how other people see you has some significance. But not a whole lot, I don't think.