How do people know that a pencil is solid

It retains its shape.

Explanation:

A pencil has uniform shape and does not attempt to conform to the size of its container as gases and liquids do. If you put a pencil in a cup, it will maintain its shape. However, if you were to put a liquid or gas into a cup or container, both of these would mold to the shape of the container and not keep their previous shape.