What is armour?
Your character wears armour pieces on chest, shoulders, head, hands, legs and feet. These armour pieces have values such as might, agility and will (“stats”), that you need to perform your skills more efficiently. By default you will see your character wearing those armour pieces.
What is an outfit?
If you do not like what you see when wearing your armour, it is possible to cover up those armour pieces by wearing an outfit. Outfits are regular armour pieces or cosmetic items that you place in one of your Outfit Panels. The stats on those items do not count for your character.
What is an Outfit Panel?
The Outfit Panels are part of your Character Journal. By default you have 2 Outfit Panels and you can purchase more in the Lotro store. Purchasing extra panels is account wide, so all your characters can use them.
How do I equip cosmetics?
To equip an item cosmetically, you drag that item (from the Wardrobe or from your inventory bags) into the corresponding slot of one of your Outfit Panels. There is a large button at the bottom of the panel that you need to click to activate the outfit.
If you cannot equip an item cosmetically (because you are not the right class or level) you can use the Wardrobe to lift this restriction.