The picture you've shared is at least two decades old at this point. And people showing their asscracks can also happen with suits, especially if someone is not used to wearing a suit often (e.g. it's not perfectly fit to their body shape).
On top of that if organizers are hoarding hundreds of people in what looks like a multi-purpose location on the cheapest chairs/tables possible, then why should these people who need to sit and concentrate for many hours be forced to do it in expensive/rarely-used clothing.
citation needed
But my question was precisely why is the minimum so high? Sure, maybe don’t allow someone to play naked or with a t-shirt stamped with gore or racist imagery. But jeans? Come on. Looking at the rules, I wonder if they’d also, for example, prevent a man from playing in a skirt that would otherwise be acceptable for a woman.
https://www.fide.com/images/stories/NEWS_2013/FIDE/Proposal_...
Otherwise you get comedy like this at a Magic the Gathering tournament. (warning lots of plumbers crack)
https://imgur.com/a/grand-prix-richmond-crackstyle-SjcgE