Walter Mitty constantly shuttles between his real life and his "secret" life, between a drab reality and a colorful, vibrant world of fantasy. What is his real life like? How well does he cope with events? How is he treated by those around him? How does he feel about himself?
In Walter's real life, he is constantly nagged by his wife. On one hand, she is controlling, domineering, and condescending towards Walter. On the other hand, she feels compelled to be this way because Walter is so absentminded. He copes with events in his real life by escaping into his dream world as often as he can. In his real life, his wife, the cop, and the parking lot attendant all treat him like a bumbling, incompetent man. But Walter is not paying attention to his real life and they are reacting to this. When the parking lot attendant scolds Walter, he thinks he is treated unfairly. "They're so damn cocky, thought Walter Mitty walking along Main Street; they think they know everything." So, Walter does think that other people don't understand him or give him the benefit of the doubt. But he clearly is unsatisfied with his life, and perhaps himself, because he prefers his fantasy world.
In his real life, he is incompetent and ineffectual. In his fantasy worlds, he is competent, admirable, and successful in anything he imagines. This dichotomy is similar to the double life of Clark Kent and Superman. Clark is awkward but as Superman he is amazing. Walter is driven to his fantasy world because of the combination of his own incompetence (or lack of focus) and how people react to his absentminded ways. His fantasy world is somewhat beneficial for Walter because it makes his real life bearable. However, it is largely harmful because it prevents him from bettering himself and becoming a success in real life.