This question is awesome. The answer should be changing with growth for all of us. As immature people it is important for us to get along with others. It teaches us how not to hurt others feelings and the joy in making others happy. As we mature it is normal to worry about what others think. How others view us often determines our own happiness. Call it co-dependency or not. It just is a fact in our teen to young adult lives.
This hopefully teaches us how to follow directions and obey those we should and be able to perform a job, or get good grades. A right answer on a test or to a boss, is not necessarily the truth, but what the teacher and boss want to hear. Hopefully they are the same but not always.
In later adult life it is a tool for achieving. We are all baby salesmen no matter what walk of life we are in. Knowing what others think of us, allows us a most powerful tool in getting that person to act as we want. Call it manipulation if you care to.
So some people, based on what they think of me, I will intimidate, others bribe and still others avoid. But I must say that I no longer buy clothes and cars so as to impress them. Now I worry more about if they think I am honest, trustworthy and loving. And if I get the sense many think otherwise. I look at myself and see what I should change.
So I hope what other's think affects people. And I hope it does not equate to a lifetime trying to seek other's approval. That is a bad road to follow as it is a dead end.