I was fairly "strict" about what my daughters could wear to preschool. They could choose, but only from certain items. No dresses (too much running around and sitting on the floor), no short shorts, and nothing too nice. Too many outfits came home with paint or marker that wouldn't come off. I've definitely relaxed now that the girls are in kindergarten. There aren't as many marker and paint projects, so their clothes don't risk being ruined. If they want to wear dresses, they, at their request, wear leggings or shorts underneath.
My daughters love picking out their clothes for school. We do it the night before, mainly to avoid meltdowns if a favorite outfit is unavailable. I'm pretty sure Tortilla has worn a dress or skirt to school all but two or three days. My biggest issue now is that I don't want the teachers to think we only have two or three outfits. You see, every time I do laundry, my daughters automatically pick their favorite outfits again... which means if I were to let them they could wear the same outfit to school two or three times in one week! We've had a big talk about how you have to have some variety in your wardrobe. I've tried putting the newly washed items at the bottom of the clean clothes pile, but that doesn't seem to stop them from digging through their drawers.
It has actually been fun to see them express themselves through clothes. Some days I can tell what kind of mood their in by the clothes they pick. For instance, if Tortilla picks pants, I know she's grumpy.
I still have one rule: no dressy shoes for school. Between the two classes I can't keep track of who has gym class on which day (each class goes three times a week). Dresses? Yes.... as long as their worn with tennis shoes.