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If he is supposed to be in hiding looking over luke why does he dress like a jedi? it would seem a bit of a stupid idea to carry on dressing like a jedi as it would be easier to spot him!

he's on the planet which, if there is a bright center in the universe, is on the planet that is farthest from... why would anyone know what a jedi is?

Well, Anakin knew what Qui Gon was, Watto knew what a Jedi was, Jabba The Hutt knows about Jedi and their mind tricks.

The answer is that the Jedi dress similar to Tatooine-folk anyway.

Look at Owen, he wears very Jedi-like robes. In fact, Obi-Wan blends in very well. Only his Jedi cloak sets him apart, his actual clothing resembles Tatooine-folk more than Jedi by the time of Ep IV.

that too, of course

but Anakin knew it from the lightsabre, cause technology is his speciality
Jabba cause as a crimelord, he probably already encountered one or two jedi
and Watto knew jedi existed but not that QGJ was one, he only realised it later in AOTC, probably because Shmi told him Anakin was to become a jedi

Yeah, but that kinda proves how well Qui-Gon blended in with the crowd on Tatooine. His Jedi robes fitted the local fashion. All native Tatooine people seemed to wear Jedi-esque robes. Anakin's slaves outfit, Luke's farmboy gear, Owen's Obi-Wan-like get up etc etc.

If I was a Jedi and wanted to blend in somewhere, without having to change my duds, I'd pick Tatooine.

oh yeah, they had luck there indeed.
but Tatooine is also good cause Vader would never go there

The robes are meant to be that of simple people everywhere, so maybe universally farmers all dress like that

They clearly weren't thinking of the PT when making the OT (if it isn't really obvious)

In only 20 years, Han Solo (who was likely over 10 at the time) doesn't even remember the Jedi!

The imperial soldiers laugh at Vader's powers (until force-choked, of course)

What people can't explain, they don't believe in.
Why would they think the Force can do more than blowing an entire planet into smithereens?

Han does remember the jedi, he just thinks that "ancient weapons and hockey religions" are no match for a good blaster at your side.
The trust in jedi is clearly non existing sine they were the ones that started the clone wars ergo creating the empire AND they tried to take over power