Tomas was the best surgeon in his hospital, and rumor is that he was to be the next chief.
Everyone assumes that, given the importance of his work, he will of course retract the article.
Tomas doesn't like that people are ready to bet on his dishonesty, not his integrity.
People start to smile at him conspiratorially.
He sees that cowardice is becoming the norm. In his opinion, everyone assumes he is a coward like they are.
He doesn't like this either, because he doesn't want to be friends with these cowards.
He also sees people who have been persecuted, but who have refused at their own expense to compromise their beliefs.
One such man, named S., tells him how it works: the newspaper will file his retraction, and if he ever speaks out publicly against them, they publish it, sullying his name. He, too, smiles at Tomas.
Tomas realizes everyone is smiling at him because they all want him to (and think he will) write the retraction. It makes the cowards happy because it validates their own cowardice; it makes the rebels happy because theirs is a special privilege.
The narrator finds it illogical that someone with as little respect for people as Tomas is so dependent on what they think of him.
The narrator thinks this mistrust of other people played a big part in determining Tomas's profession. A doctor is not on public display; instead, he is judged man to man, by his patients and his colleagues.
But now, with this retraction business, he is being judged publicly by everyone.
He goes to the chief and tells him he will not write the retraction.
The chief is pleased and shakes Tomas's hand vigorously; yet Tomas has to be fired for this decision.