Point about Aerith is she isn't meant to be hot - she's meant to be cute, innocent, pure. That's whole point of that love triangle - Tifa and Aerith are opposites. Her longer dress was deliberately to contrast with Tifa's for example (developer interview from '90s).
I heard someone mentioning that their clothing is meant to be the opposite, in order to make the player surprised by their true personalities.
Aerith wears pink, a dress, does her hair in braids, etc. Someone could be led to believe she is innocent and introverted by her appearance. However, she is quite extroverted personality-wise. She is a young woman who knows the slums. When you first see her after the explosion, she's calm when everyone else is running around panicking (sure, she gets knocked down, but she immediately stands up by herself and brushes herself off instead of having Cloud give her a hand). She catches Cloud by surprise when he sneaks out of her house and she decides to choose the sexiest dress in the clothing store, a striking red dress showing off a bit of her cleavage, and she also does her hair and has earrings. She sees through Cloud's bullshit "macho" exterior, having experienced Zack, and tries to see him for who he really is. Aerith tries to dismantle Cloud's persona, asking him questions that challenge his core, while Tifa plays along with it and hides several truths. That's sort of the thing, Aerith's already been toughened up by her relationship with Zack and the grief she's experienced after, so I don't really get it when people say she's meant to be "innocent". She's also a flower peddler who tries to sell flowers in downtown, and if you've ever been in retail, then you'd know you have to grow a thick skin to deal with people. Another example is when they're threatening Corneo, Aerith says "I'll rip it off" before Tifa's threat. Aerith is very playful and a bit of a fun-loving troll.
Tifa wears no distinctive feminine colors and shows a lot of skin, especially her midriff. One would assume she's extroverted, but Tifa is actually very shy and introverted, and has difficulty asserting her true feelings openly. For example, during the Gold Saucer date, Tifa says "Okay, I'm just going to say it... Aerith probably be able to just come out and say it... Cloud... I..." but then becomes silent and is unable to assert her true feelings (her love) for Cloud. It's pretty clear that Tifa is jealous of Cloud's attention to Aerith and feels like a second banana.
I think a lot of players judge Aerith and Tifa by their appearances and accidentally switch their personalities. Aerith is cute, like you said, but once you analyze their personalities, I think it's pretty evident Aerith isn't supposed actually "pure and innocent" like some fragile flower. Imo, it gives them a lot of depth.
