This is a common saying which means that the essence of religion is good manners when dealing with others. Some people consider it a Hadeeth while others believe it to be a proverb, but we have not found it in any source book of Hadeeth.  It seems to be a proverb that signifies the importance of good manners in Islam as confirmed by many Hadeeths of the Prophet , who told us that he was sent to perfect high moral standards. [Maalik in Al-Muwatta’]

Also, the Messenger explained that those who have the best manners will sit nearest to him on the Day of Judgment.  [Imaam Ahmad. Al-Haythami: Saheeh (Authentic)] 

In another Hadeeth narrated on the authority of Mu‘aawiyah the Prophet said that "the best Muslim is he who has the best manners". [Al-Bukhari]

These Hadeeths, as well as many others, show us the great importance and value of good manners in Islam. A Muslim could be a caller to Islam through his manners without uttering a single word, because actions influence people much more than words do.

Allaah Knows best.