It is absolutely simple. If being covered up is modest, then being uncovered is immodest.
It's not rocket science.
It plays into the idea that women having any kind of bared flesh are immodest and therefore inviting male attention.
I've heard the same rhetoric applied to women covering their hair, that it is a sign of modesty. Clearly then uncovered hair is immodest. No other conclusion can be drawn.
An early poster said that isn't about you OP, but they are dead wrong, because the damaging idea that a woman's worth is weighed in terms of their perceived purity does in fact concern all women.
You are correct OP, and the terminology that these clothes are modest is deeply damaging , retrograde and flawed. It is the reverse of feminism. When you look at the sickening way this ideology is applied to the women of Afghanistan it is frightening.
Now you can say that's hyperbole, but look at the women of Iran. They could wear miniskirts until 1978. Look at America, the land of the free. Except women don't even have bodily autonomy.
Women's rights are hard won and so easily lost.
Clothing specifically designed to satisfy a religious requirement being described as modest, rather than religiously mandated is insidious to say the least.
I'd never wear a pair of Nike Pro hotpants myself. But I support every women's right to do so without the judgement that showing her legs makes her lesser.