It's okay to wear colourful dresses on special occasions, though! You can't go to a hobbit party (you know, pies and fireworks and beer and all that) with a dull brown ragged robe, it'd be silly.
But just think of it: how is a burglar supposed to blend in with the background if he or she is wearing a bright orange outfit in a forest? You can get away with red and orange and other bright colours if you're, I don't know, a ladybug or a strawberry, but for humans it's definitely not going to work.
Or how do you expect a dwarf swimming in yellow shorts to... errrr... I'm... not quite sure... how you could... I mean... I suppose you could... dye your beard green and... and pretend to be a huge... floating ball of seaweeds, but...
I have very mixed feelings about that picture.
Anyway, most of my characters have one or two silly outfits for festivals. However, my captain only wears black because I'm a roleplayer who has not come out of the closet yet and I like to think that she's a serious person who only does serious stuff. You can't yell and shout on the battlefield to motivate your fellows and expect to be taken seriously when you look like this:
Yes! I am not afraid of anyone! I could fight anyone, no matter if it's an orc, a troll or a balrog! I could even face the trolls from GLFF in that outfit! I am so awesome! Riders of Rohan, to meeee! Yes!!!
... except no. I put my amazing black outfit on, got my huge black horse and went to Bree-town and that helped to put things into perspective.
Was it my unusually big horse? Was it my heavy armour? The huge two handed sword? My title? I will probably never find out, but someone definitely clicked on my character, walked up to me and still thought I was a man.
From now on I shall be known as Sir Tuljak the Strong.