explain what happens to the villagers as a result of Esteban's presence?

Because he was different and a stranger, the men went out to look and see if they could determine his identity. While the men were gone, the women who took care of the body began to idealize the stranger and look down on their own men. They gave him a huge funeral, as he was a large man, larger than life if you will.

The villagers gave him a father and a mother before sending him back to the sea; they gave him aunts and uncles, and in turn every villager became family. They honored him with so many flowers it became hard to maneuver through the streets, and the men vied for position to bear his body in the funeral precession. When they sent him off to sea, they didn't anchor his body, allowing it to flow freely and giving it the freedom to return if he wished. They then widened their doors and raised their ceilings for the "big" man. The entire village changed because of the drowning of a stranger.