Odysseus is disguised as a beggar by the goddess Athena, who is helping him plot his revenge against the suitors who are courting his wife. From the vantage point of a beggar in his own court, Odysseus is able to assess who remains loyal to him, who the suitors are, their habits, and he is able to sow dissent amongst them. The information he gleans allows him to formulate a plan for revenge.
Agamemnon's warning also causes Odysseus to be weary in returning home as himself, as he does not know if his wife is true and on his side yet. Odysseus also is able to see if his wife has remained loyal to him after all these years.
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Odysseus disguises himself as a beggar to test the loyalty and hospitality of those he encounters upon his return to Ithaca. By appearing as a beggar, he is able to observe how people treat the less fortunate and discern who his true allies are in his quest to reclaim his kingdom. Additionally, the disguise allows him to move about Ithaca without being recognized by his enemies.
Odysseus believed that the other beggar viewed him with suspicion and did not recognize his true identity. He thought that the beggar saw him as just another wanderer or stranger passing through. Odysseus cleverly played along with this perception to maintain his disguise.
The symbolic meaning and practical application of the old beggar is so nobody will know that Odysseus is back to Ithaca. So if Odysseus came back not disguised everyone would know that he is back in Ithaca.
Penelope asked the beggar what he remembered about Odysseus, what he looked like etc. The beggar was easily able to answer these questions. She asked these questions to ensure that the beggar was not just making up a story to get her hopes up. She made sure that the beggar truly had seen Odysseus.
At first, Odysseus is disguised as an old beggar by Athena. When his disguise is lifted, Telemachus believes he is a God and then after some persuasion believes that Odysseus really is his father.
Melanthius, the goatherd, treated Odysseus and Eumaeus poorly, verbally abusing them and even kicking Odysseus in the hip. He treats both of them as lower class, and calls Odysseus a man who became a beggar out of laziness and refusal to do work.