I was doing diplomatic immunity and I went outside while wearing elvin armor. one of the guys spots me and went hey let me get a closer look at you you must be new here.
they noticed I was wearing there armor so he thought i was one of them at first. I couldn't see what happens when he gets a look at me because a dragon attacked out of no where.
this game man this game.
Yeah, the fact that NPCs notice what you are wearing - and the SIGNIFICANCE of what you are wearing - is one of the awesome things I'm glad Skyrim brought back and improved on from Morrowind. It isn't just in quests either.
I had a unique daedric artifact and a town guard passes me, stops, turns around runs back to me and says, "Wait! You have [specific name of the artifact]! How did you get that?! You must be someone very important!"