You didn't really see the most extreme of the disco outfits come out during the light of day too much.  They were, of course, designed to show up in the strobing lights of the dance floor.  Exposed to direct sunlight, who knows what might have happened.  That might explain the Village People.

In truth, as the video below will show, disco fashion did reach out and touch those outside the disco fantasy world.  Business attire changed and I doubt that some of the "business" clothes of that period would cut it today.  Different strokes for different folks though.  I remember my sister taking me to get my first haircut that wasn't at a "regular" barber shop some time in the late 70's or early 80's.  The guy who did the cutting was nice enough, but for all of my memory blocking attempts, I can't forget the shiny shirt unbuttoned half way down his chest and the gold jewelry swinging beneath it.  I left with bangs removed and a brand new "feathered" look.  I have never been so glad that my family didn't take a lot of pictures of me back then.  I know they had good intentions, but MAN!