I had to laugh, because it's true. Some of the Chinese ladies in this area (of which there are a lot, this is a big Chinese immigrant community) don't just wear ugly clothes, but they wear a lot of different ugly clothes all together. In a single day, you will encounter women with paisley pants, plaid shirts, and neon green sneakers. Or a giant bucket hat, a lace blouse, and MC Hammer pants. Individually, the clothing pieces aren't anything to write home about - not my taste, but generally kind of under-the-radar - but the thing is that when you combine them all into an Outfit, it exponentially increases the power of the fugly.[And, nowadays, there's a trend for women to wear these gigantic green plastic sun visor kind of things over their faces, so they look like welders. Or, they opt for the traditional surgical face-mask.]
So Shirley and her sister devised a reasonable explanation for the crazy outfits. Since none of the ladies seems to be trying to make a fashion statement or start a new trend, and they mostly seem dressed for comfort, Shirley decided that these were just the ladies' "best outfits." That was their best blouse + nicest pants + most comfortable shoes = Best Outfit. Material, color, pattern, print... these are all irrelevant in your 'best outfit' because you may not have a coordinating set of favorite clothes.
Now we use "best outfit" as a catch-all for crazy or terrible clothes, which is handy for people watching. You don't even have to whisper "hey, best outfit on your left."
This is a good example of a Best Outfit and also Favorite Color
Related Post: Favorite Color