Let me clarify:
In both worlds we have people who dress themselves to achieve an effect. For themselves and how others see them. This is a commonality for sure.
However in real life there are far more concerns when interacting. The people are real, limited by physical laws and genetics. They cannot help who they are or what they look like beyond a covering. The people observing have to worry about: Staring, facial expressions, proximity during conversations. They also have to consider that if someone is doing something they do not like but have no grounds to say anything about say, looking unpleasant or smelling unpleasant or performing an action that is socially acceptable but not personally acceptable, the only choice is to remove themselves. You have no right in real life to request others conform to your own desires as long as those people are following social and legal rules and by the laws of physics cannot do anything that won't encroach upon the other people besides moving yourself. That is all you have control over. You are limited by the fact that real is real and there is no way to remove someone from an area you wish to be in or make them not be a part of your life as a bystander if they so end up doing.
In a video game you don't know what I'm looking at or even if I'm paying attention to you so dressing for attention is mostly in the mind of the dresser. There is little to no feedback if a "attention" avatar is working other than people who go out of their way to complement it. There are possible options to remove social interactions I do not desire to have without any indication, unlike real life where I would have to move or tell you to stop talking to me or physically look away.
Do you really NEED someone to be able to see you if they don't like what they're seeing? Do you specifically NEED people to see you and know that even if they dislike what you're wearing they have to see you. This sounds slightly antagonistic from my perspective.
I'm going to say that people are taking the immersion argument wayy too far. Both sides. Yeah the game has silly costumes and people want to act like their avatar is them for real and wanting to censor or change it is akin to telling someone in real life that they personally are "unacceptable".
That is all noise.
I am playing a game with a role playing element and a story and if you as a person are going to play a character or dress in a way that ruins that story and feel for me I would like recourse to eliminate you from my experience, just as you would likely not want me constantly enforcing my personal interpretation of what FFXIV is all about, I don't want you having unchangeable influence over my own experience. You could argue I am "ruining your experience" by just knowing you might not appear as you chose on my screen, but it's a pretty weak argument considering one is an actual visual influence and the other is "just the idea". You do not have a right to be a part of my experience in a virtual space with rules that can accommodate this kind of modification and no real world physical limitations.