The discernment of admirable friends can be seen in two things: the standards by which they judge you, and their purpose in judging you.
If they’re really discerning, they’ll judge you by your actions—not by your appearance, wealth, or anything else over which you have no control.
They’ll judge your actions both by the intentions on which you act and on the results of your actions. In both cases—and here’s where the Buddha’s sense of honor inverts the military sense of honor in which he was trained as a young prince—the standard of judgment is that you can find happiness in such a way that your intentions and actions harm no one: not you or anyone else.
The purpose for which admirable friends judge you is not simply to arrive at the judgment. They want to help you recognize why your mistakes are mistakes, so that you can learn not to repeat them. In this way, they’re encouraging you to develop the true source for your happiness: your ability to act with more and more skill.
If they judge you in these ways, your friends show that they’ve developed both of the discernment factors of the path: right view—in seeing the importance of action—and right resolve, in extending goodwill to you. If you internalize their standards, you’re internalizing the path as well.
This reflection by Than Ajaan Geoff is from the book, First Things First: Essays on the Buddhist Path, (pdf) pp. 16-17.