An NPC wears clothes according to their status and position in the world. A blacksmith such as Adrianne Avenicci would wear a blacksmith's apron while most merchants would wear normal clothes. Couriers usually wear belted tunics and beggars, such as Brenuin, usually wear ragged robes along with a ragged cap.
Fine Clothes are usually worn by the noble men, for example Olfrid Battle-Born. The Jarls of Skyrim, such as Jarl Balgruuf usually wear noble clothes. The Emperor wears unique clothes, that can also be found in his dresser aboard the Katariah.
It is also noteworthy that a piece of clothing's style may change based on the sex of the character that has it equipped. For example, a belted tunic worn by males will have trousers, while females are wearing a long dress.