Yep, they look to you for how to react. Before we got FawkesPup I had a salutary lesson in this. We went to my cousin's with all the doggos. DS got a bit tense when they ran to him, one barked and then seeing DS looking scared they all started like "why are we barking, what's to be scared off, keep barking!"
Carrying on regardless seems to make them think everything is just fine, no need to stress.
We've been hearing gunshot today (we've got loads of bird farms nearby, could be that or crow scarers) and FawkesPup didn't bat an eyelid when he heard one.
He's definitely getting better at ignoring other dogs than he was. Still a big work in progress.
Off to see my parents tomorrow with the puppy in tow. It's worse than taking a newborn! Do I take the pen, do I not? How am I going to deal with the long journey? Will he sleep? Will the crap all fit in the car????? Hahahaha