I was in Brooklyn NY recently in a Hasidic Jew neighborhood. The children in a family were often dressed in matching clothes. The brothers and sisters had shirts and dresses made out of the same material. This seemed to be their everyday clothes - not a special occasion. It was a little odd.
When I took my kids to Disneyland I made them wear matching t-shirts so I could keep track of them and be able to describe what they were wearing if one went missing.
Good God. Really? These kinds of questions make me think some people need to get out of Utah more.
This happens everywhere I have ever lived. Maybe it's for a party. Maybe they just like to be similar. It's certainly unusual, but not restricted to mormons or Utah.
Who cares? If it makes them happy, let 'em wear what they want. It's not hurting you. There are certainly worse things they could be doing.
When I do family photos, the families often ask me if they should all wear matching outfits (the favorite being white shirts and jeans, though most of them aren't mormon).
I always suggest they don't, but of course leave it up to them. Some ask why I suggest they don't; I usually tell them "because you're all individuals with your own personalities expressed at least partly through clothing. Wearing all the exact same outfits seems a bit cultish to me."
Most laugh at that, and agree. One last year asked me, "You're an ex-mormon, aren't you?" He was too :)
My mother used to put all her girls in matching dresses and the boys had shirts to match. It was a matter of economy. She could buy an entire bolt of fabric at a discount.
I don't know anyone that makes clothing for their kids anymore. It's much cheaper to go buy it. Not too many women have the time to sew all their kids clothing.