I make 5 of each kind and my Sims picks from all the ones I have assigned them. They change on their own. I play in rotation but jump around a bit randomly to different households in my rotation - depending on what their story is. Everytime I return to a household I pick them whole new wardrobes - with 5 of each kind - as I am not fond of my sims wearing the same 25 outfits all the time. I vary it up a lot. The only clothes I don't change the 5 of are the the weather outfits. I picked 5 warm and 5 cold outfits for now. I may vary them up eventually if we get more warm and cold weather clothing eventually.
For certain special occasions - like a wedding attendance - I may pick a different outfit if my 5 formal outfits are not very wedding worthy for a guest. LOL.