Your question is good and with it I can imagine you want to swap clothes a lot. There are different ways on doing it and I will try to describe based on my experience.
Modeling characters:
Some artists like to make a nude model to make sure about the proportions, meaning how much muscles the model will have, how wide the shoulders or waist would be, the interspace at the legs,e tc. Basically defining this ahead is important, because metal armor can makeup huge or desproportional bodies if you dont take this into consideration. Basically they want a good shaped model using rags that will still look good using an Imperial armor.
Once the body is modeled, the artist sketches up all the possible equipment variations until he can find for each family type, the multiple bodies he will need to replicate, meaning: visible head and hands only, visible head and whole arm, visible head and arms and feet but no hands. This is important because the geometry which is covered by equipment is a waste of geometry that will take a tool on performance later, so dividing into several models will make possible to have less covered parts. These replicated and cut out bodies are all rigged already, since they were based on the first. This makes you experiment the animations later with the pieces of cloth/armor you made in the correct model.
Depending on the clothing being used, the model is switched to have the minimum covered parts possible.
Modeling clothes:
The cloth will be modeled on top of the model and will share the same skeleton and will be weighted similarly as the body so when you bend an arm, the cloth will follow the same bend as the arm.
How much stuff you will want into your clothing is another matter thou. Imagine a leather armor, which you can have it as is or with a plating covering the heart area. You might want to model a second piece or you can use attachments later. This is nice, because creates accessories that you can use to upgrade your equipment. In this case the accessories are modeled aditionally, does not need necessarily to follow the character skeleton unless it needs to bend aswell… still in this case depending on the amount of effort you may decide which is the best path to follow for better visual results or versatility.
Parts of the clothes that will move because of physics, there is an special tool for you to paint inside Unreal the amount of bend the cloth solver will use for that specific part. There are videos you can find for this too.
I hope this gives you a glimpse of the possibilities, since this is not a treaty about modeling, but just my experience on the matter. There are several ways to crack eggs.