The high placement of the waist is definitely a big part of why the dress looks 'off' to me. It's not how that style of dress is normally shaped (either historically or by "Disney princess" designs) - the bodice is supposed to be longer and the skirt sits at the waist. Here, it sits just under the bustline and it changes the look of it a lot.

I suspect (as someone suggested earlier) the dress was originally modelled for Lalafells, and to cut corners they reused that bodice shape and just resized the skirt rather than actually modifying the dress to fit the different character models.

I photoshopped it to compare how it looks with a lower skirt placement: