It's a very confronting feeling, knowing that other people are watching you, judging you. It's the main thing that makes performance challenging, despite its many benefits. It might seem like that feeling of judgement is something to get past, a distraction that stops you from receiving the other benefits of performance like learning to act under time pressure or calibrating your risk sensitivity. However, I actually think being judged is valuable in its own right.
When you know that people are listening, you speak differently. When you know people are reading, you write differently. When you know that the things you make aren't going into a desk drawer, but rather out into the hands of real people, it changes your thought process. You start to visualise them, their reactions. What are they thinking as they see what you've done? Do they laugh? Do they struggle to understand something? Do they get bored partway through?
When you internalise that audience, it becomes a kind of superego, an oversight body that you bounce things off. Hey, audience, what if I mix up the style a little bit here? You're probably getting bored of plain old prose and want something a bit adventurous. No? Too meta? Okay, no problem. The very nature of that feeling of judgement becomes useful as a tool to hone your work before it even reaches an audience.
On top of that, there is a sense in which an audience makes things real, crushes them against hard reality. While your perfect special snowflake can exist in your head untarnished by contact with real people, deep down a part of you wonders... well, if your imaginary friend is so amazing, why is nobody else allowed to see them? Pitting your work against audience judgement is a trial by fire but, if it passes, you can feel justifiably proud.
It's for this reason, the usefulness of judgement, that I think building an audience is important. It's worth making sure that the things you make get seen, read, heard or used – even if you're not making the work for the audience. The value of what you do isn't necessarily how it's judged, but something that is bad is definitely be more likely to be judged harshly. Knowing that your work will be judged lets you judge it yourself, and makes you hold it to a higher standard.
Though one thing to remember is that this is an essential difference between creation and creativity; although your creation can and should be judged, both by your audience and by yourself, I think that judgement hurts creativity. Nobody likes venturing an idea in a room full of people ready to tear it to shreds. The idea needs time to grow before it can be judged fairly, but there comes a time – sooner than you think – where it must take that first halting step into the limelight.