Several examples of outward appearance being deceiving (or, at least, not at all indicative of reality) can be pointed to in the book. The arm-wrestler is one minor example. Two more significant examples are found in Santiago's eighty-four days without catching a fish and in the final state of the great marlin Santiago brings in.
All these examples of the inadequacy of appearance to convey reality are ultimately related to the theme of the importance of strength of spirit (or strength of will).
The man who arm-wrestles against Santiago is a big man - bigger than Santiago. Despite his appearance of strength, the smaller man wins the match because of a superior strenght of will.
Santiago's failure to catch a fish for over eighty days conveys a false sense of his abilities as a fisherman. He is a great fisherman, as he proves when he catches the marlin in the story. Lesser men may have been disheartened by such a drought, but Santiago's faith in his abilities indicates, again, his great strength of spirit.
The most poignant example of false appearances is found in the carcass of the marlin strapped to the boat. The appearance is one of outward failure. Santiago did not bring in the "whole fish", but rather a skeleton, a mere echo of his accomplishment.
At the pier, his fellow fishermen marveled at the skeleton of a fish larger than any that they had ever seen.
However, it was an accomplishment. Santiago succeeded in catching the fish (a feat that not many others could have accomplished and that many others would not have even attempted).
It was not, after all, the successful return with the marlin that was his mission; it was the struggle itself that proved Santiago's worth.