When combined, the logic is very clear: 试 (to try) + 穿 (to wear) = 试穿 (to try wearing).
While “trying on clothes” is a universal activity, the context in China has some unique aspects.
试穿 is used in a very direct and practical way, primarily in the context of shopping.
The term is neutral in formality and can be used in any shopping environment, from a luxury boutique to a fast-fashion outlet.