There is no problem not saying good Shabbos to a passerby if you know her (for a man). The issue arises if it is a total stranger. If you said “Gut Shabbos” to everyone you pass in a place like Boro Park you would end up greeting so many people you wouldn’t get to walk anywhere. In smaller cities most people assume they know, or should know everyone, and everyone tends to greet all Jewish passerbys since it would be insulting not to pretend you know them.
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