That's the outfit Obi-Wan wears when he's playing the old hermit on Tattoine. It's also how Luke's uncle dresses; essentially, it's the "Tattoine man" uniform.
Jedi knights dress like this:
Imagine Sam Jackson done up like that.
Also, one of the major differences between the Star Wars prequels and the original trilogy is that most of the action in the former takes place in beautiful, classical cities, while in the latter, it's almost all space stations, ships, and very sparsely populated planets and their spaceports. I like the contrast, but I think it demands explanation. When and why does the Empire seem to decamp, permanently spreading its power through its fleet? The Death Star isn't just a planet-destroying weapon: it's also a mobile and nearly impregnable fortress to project power. In the early stages of the rebellion, did the Imperial fleet level cities? In the absence of the Jedi, did social order dissolve? Did the Emperor grow paranoid like Dick Cheney? These questions demand answers.