I mean, Cid Highwind wears cargo pants a t-shirt and denim jacket. Modern clothing has been in the franchise for a long time.

Sure, it's a fantasy setting with Elves, Dragons and knights in full suits of armor carrying swords. But it also has cars and mechs and guns and laser beam weapons.

Wearing a t-shirt, jeans and leather jacket like Squall isn't really that immersion breaking when you really think about it.

I think maybe you have a different idea of what this game/ franchise's fantasy should be.