With the revival of Irish dancing, the traditional Irish costume has become associated with the bright flamboyant costumes worn by traditional Irish dancers. However in ancient Ireland people were more likely to be seen wearing 'leine' (Irish for shirt), trews (Irish for trousers) and long cloaks fastened with a brooch.
All in all there are a lot of myths and legends surrounding many of the so called 'traditional' costumes. Often when you do some real historical research you will find that they aren't that old or traditional.