While this Talmudic dictum is generally understood to mean that we should not be critical of another's action because we may not be aware what circumstances led to the behavior, there is also another possible interpretation.
I once heard a recovering alcoholic say, "I used to judge my insides by everyone else's outsides. I felt deprived because I saw other people smiling, but I did not feel like smiling. I saw other couples communicating, while my wife and I did not. Only later did I realize that when other people smiled, I didn't known whether they felt like smiling, and that when I observed other couples communicating, they were in company, but it was certainly possible that when they were alone they did not communicate at all."
Externals are all we can observe. How often do we smile or otherwise act as though we were pleased, while internally we are a cauldron of dissatisfaction? Just as others may mistakenly think that we are happy, so may we mistakenly think that they are happy and that we are missing out. In all likelihood, we are no more and no less satisfied or dissatisfied than anyone else. We should not gauge our insides by others' outsides, but should set our individual goals and do our utmost to achieve them.