For most people, being aware of what others think and feel, and being aware that they are aware of that, is a powerful constraint on behaviour. We don't behave badly because we know that other people know that we know better. The loss of this ability in people with Alzheimer's disease likely contributes to families feeling that the person is no longer like their old selves.
Many people behave worse with family than with others. They show emotions - anger, for example - that they would hide with people they know less well. In dementia, however, the loss of constraint is often more evident with other people, especially strangers, than it is with families. Unexpected rudeness on the part of a family member with dementia is embarrassing, and that person's insensitivity towards someone who is providing care is hurtful. These are normal feelings to have. Like many such feelings, telling someone else about them is a good way to cope. It is also said that "time + embarrassment = humour", in other words that recounting the incident as a humorous tale is helpful. In fact, the ability to share such "gallows' humour" is part of the Alzheimer support group experience that many people especially appreciate.