While true that isn’t what kiddish hashem means we do want Hashem to “look good” by the goyim, a way to do that is for us to look good.
The first example that comes to mind is Both Avraham and Moshe rabbeinu used the argument of “what would the goyim say” חָלִ֣לָה לָּ֔ךְ הֲשֹׁפֵט֙ כָּל־הָאָ֔רֶץ ) לֹ֥א יַעֲשֶׂ֖ה מִשְׁפָּֽט and לָמָּה֩ יֹאמְר֨וּ מִצְרַ֜יִם לֵאמֹ֗ר בְּרָעָ֤ה הֽוֹצִיאָם֙ לַהֲרֹ֤ג אֹתָם֙ בֶּֽהָרִ֔ים)