The proverb just means it is better to be honest than any thing else. We must be honest in words and deeds. I am going to tell you a short story to show you what this means.

One day while cutting wood ,a wood cutting's axe stipped from his hand and fell into a nearby river. The wood cutter was full of grief at his loss. He sat down beside the river and lamented bitterly. Mercury, the god of  water heard the wood cutter lamenting. He came out of the water and asked .the wood cutter  told the God the cause of his grief. When the poor wood cutter told the God the story of his bad luck. Mercury at once dived to the bottom of the river and held before him an axe of gold asking the man if that was his. But the wood cutter refused to take it saying that was not his axe and that his was an old blunt one made of steel. The Mercury dived the second time and held before him an axe of silver, then again the poor wood cutter refused.
The God was very pleased with the honesty of the poor wood cutter and so gave him not only his lost axem, but also the gold and sitver.