Dress
Italy has historically been divided and the traditional dress matches the region more than it does the nation as a whole today. The similarities came in basic pieces of clothing as women tended to wear a dress and men generally wore pants with a shirt and perhaps a vest or coat. Embroidery was common on the clothing and with seasonal changes the clothing also varied drastically. Colors also varied, but for special occasions brighter colors were generally worn, although most everyday clothing was simply white, grey, or black.
Today some of these clothing items can be seen on special occasions and local holidays, but no one wears these traditional clothes regularly today. The Italians prefer modern western-styled clothing and Milan is considered one of the fashion centers of the world so the styles are always changing and it's impossible to argue that the Italians are fashionable. Despite the ever-changing fashion, the diversity in clothing is great.
As a visitor to Italy you are free to wear any western-styled clothing that suites you, but wearing shabby clothing will get you odd looks, especially in the cities. The most important thing to remember is to dress for the occasion as most churches require you wear long pants and cover your shoulders, while business settings and nice restaurants often have an even more formal dress code. If in doubt, dress on the more formal, conservative, and stylish side.