100% This, answering his question would require a lot of plot being spoiled which I will not do. Typically as stated NPC’s will address Henry based on the clothing he wears and how dirty he is.
Haven’t bathed in a while and your gear is filthy = NPC’s might remark how much you stink
Got you ass handed to you in a fight and haven’t washed off yet = NPC’s will remark that you look like you just got your ass beat
Wearing Noblemans clothes = NPC’s will treat you not so much as a Nobleman but of someone of wealth
Wearing Plate Armor = Many NPC’s will refer to you as a Knight
So on and so forth, its actually a really nice mechanic and I enjoy that your appearance will change how NPC’s interact with you to some extent.
Don’t forget that your reputation also plays a large roll in how NPC’s will greet you. If your rep is extremely negative some NPC’s will actually run from you in fear or you’ll have to bribe them just to talk to you again, alternatively if you have very good rep many NPC’s will say something like “Hey Henry’s come to see us” as you walk past them, and vendors your friendly with will often accept items from you for a much greater price or allow you to haggle them way lower than they normally would.