Jesus knew the hearts of the Judeans and that they wanted to kill Him. However, the Judeans told Jesus that He has a demon and asked who wanted to kill Him (7:20). The question implies that the Judeans did not want to kill Jesus -- instead, someone else.
Turns out that the people questioning Jesus were the same questioners from John 5. Jesus recalled the Sabbath healing from John 5 and discussed how the peeps have circumcised a man on the Sabbath (7:22-23). Because of the contrast, Jesus is essentially bringing up hypocrisy; the Judeans had a double-standard.
Thus, Jesus finishes by telling them to not "judge according to appearance" but to "judge with righteous judgment" (7:24). Part of the meaning is thorough judgment (full examination vs at first glance), but there's more. You're probably familiar with the question on Christian hypocrisy. Such hypocrisy likely came from how they judge others but make the same mistakes. The judgment is likely done for them to claim the "moral high ground", so their judgment is based on the appearance of themselves. Righteous judgment does not involve judgment to get the "moral high ground" but involves a complete judgment -- even on us. And if we're honest, we have done some not-so-good actions towards other people, which messes up our report.