Our speaker is totally judging by appearances. And he doesn't like what he sees. All the people in the little boxes they call houses are boring the speaker to death. They don't ever push the metaphorical envelope. Even when they're in their own homes, they don't take the opportunity to let loose and put on some funky bed wear. Their appearances are total yawnsville. The speaker of "Disillusionment of Ten O'Clock" offers an alternative to his readers, so that we, too, don't commit the same fashion crime of being bland.
In the poem, outward appearances are both the result and source of the inner realities (imagination, consciousness, self-image, etc.) of the people. It's a vicious (and awesome) cycle.
The clown-like color schemes suggest that the speaker's ideal version of reality is one filled with excitement, wonder, and theatrics.