Does the Goblin polymorph help in PvP?

I wouldn't count on it as a PvP advantage. A smaller-looking character might be less noticeable at a glance in a crowded fight, but that doesn't tell you whether targeting or hit detection changes. If health bars appear when opponents are nearby or detect you, the small model may not hide you for long.

If you want to check, have someone compare spotting and targeting it against a regular character in the same conditions. Until then, I'd treat the polymorph as cosmetic rather than a dependable way to avoid attacks.