I have previously spoken on fashion from an historical point of view, but how do you apply that to fiction? The first thing to consider is the climate and what types of fabrics and dyes were available. If the climate is generally warm you might use cottons, silks, or other light weight materials. You wouldn't wear a full wool or leather outfit in hot weather, nor would you wear a only a cotton tunic in the cold. Once you have established the average temperature and its fluctuations you can look at what is accessible. Are you on an island with lots of sheep? Do you trade with other cultures? How advanced is the textile industry? Is everything handmade locally? Or do you have a thriving industry that makes inexpensive clothing quickly? What dye materials are on hand?
In the middle ages, most dyes were made using natural colorants such as walnuts for browns or marigolds for yellow. There are many ways to get certain colors and what is used may determine the expense and limitations of certain colors. In many cases religion and cultural beliefs dictate what colors are deemed socially acceptable. For most of Europe Catholicism, and later Protestant, doctrine held that bright colors were extravagant and engendered a feeling of pride which was a mortal sin. Thus those of lower classes were encouraged to wear somber greys, browns and blues. This still allowed for quite the range of colors and were not as limiting as modern conceptions believe. The brighter colors were reserved for the upper class nobility since they tended to be more expensive and time consuming to make. For examples of dye recipes check out this article from Rosalie's Medieval Woman. The Tres Riches Heures du Duc de Berry has wonderful depictions of both peasants and nobles in the early 15th century. This selection from the manuscript shows peasants in a variety of greys, blues, browns, and reds. To see more images from this book check out the collection at Chateau de Chantilly.
With the rise of a middle class in the later middle ages many rich merchants wanted to wear clothing similar to the nobles and so many kingdoms enacted sumptuary laws to restrict what could and couldn't be worn by each class. A great example of one such law came about with the rise of pointed shoes as fashion. While it may seem silly to us, the pointed shoe fad got to the point where the shoes became so long and distracting that they obstructed the wearer’s ability to walk. For the longest ones a string was attached below the knee to assist in moving the toe points to enable walking. The string was occasionally depicted in art, such as this.