Y'know. Like in Oblivion. I don't know if everybody wore diapers in the middle ages but I always thought they looked kinda silly. They could just give them underwear a la Fallout.
Well, considering that the devs intend people to be walking around in clothes and armor, underwear isn't really a design concern at the moment. Or any moment for that matter. This is why that sort of thing is left to the modder community. If the devs intended for some of the game play to be walking around in your underwear, I'm sure more effort would be indicated. Otherwise, they only serve a purpose to cover the player up while not wearing anything else at the moment.