How do I know that madam defarge was knitting peoples faces and names instead of something else?

Actually, we don't know what Madame Defarge is knitting until we are explicitly advised of the fact. I have never heard that her knitting included the faces of those murdered at the guillotine during the revolution, but we are informed that she is knitting a register. The idea of knitting a list or register is a myth of the French Revolution that Dickens used in the novel.

"Are you sure," asked Jacques Two, of Defarge, "that no embarrassment can arise from our manner of keeping the register? Without doubt it is safe, for no one beyond ourselves can decipher it; but shall we always be able to decipher it—or, I ought to say, will she?"

"Jacques," returned Defarge, drawing himself up, "if madame my wife undertook to keep the register in her memory alone, she would not lose a word of it—not a syllable of it. Knitted, in her own stitches and her own symbols, it will always be as plain to her as the sun. Confide in Madame Defarge. It would be easier for the weakest poltroon that lives, to erase himself from existence, than to erase one letter of his name or crimes from the knitted register of Madame Defarge."