In English, you can change some adjectives to a noun by adding "the": 1. There are many poor (adjective) people: The poor (noun) are numerous. 2. Should rich people pay higher taxes? Should the rich pay higher taxes? 3. Young people often make bad decisions; The young often make bad decisions.

Noun - Because the noun in a sentence is the subject. It is typically a person, place, or thing. Although, honest is typically a descriptive word which would then be an adjective in the sentence you provided the word "honest" is being used to label a group of people. In your sentence it is a noun.