Great question, Carla. I haven't read the responses yet, but I will say that I do two kinds of "hike." One is what I think of as my regular urban/ suburban ramble. This is in my neighbourhood. It involves hills and the surfaces are a mix of pavement and trail (gravel, chip).
For these, I generally wear regular clothing that is on the casual side -- not true gear -- but I do wear different footwear than I would wear for a strictly urban outing. For winter, because it gets muddy and wet, I often wear my Blundstones. In warmer weather, I choose sneakers with a more grippy tread than my Soft 7s, and in summer, I have a pair of trail sandals or a sort of crossover trail sandal that I wear because gravel on the hills can get slippy.
If it's raining, I'll wear a gear raincoat. If chilly, a light puffer. Underneath, my normal clothes -- jeans or dress pants or a skirt in summer. Doesn't matter.
I also hike longer and more ambitious trails about once a week. These are rockier, steeper, sometimes wet, sometimes very dry, and the weather can be changeable, especially in winter. For these outings, I wear actual gear -- merino base tops (different weights for different times of year), hiking boots or trail runners or trail sandals. So I do have a gear capsule, yes.
I love, love, love my merino layers. They do not gather smell, they breathe, they keep me cool or warm. SO useful in my climate. I love my hiking shorts, which have useful pockets. (I also wear these shorts as regular wear, at times...) I need my gearish raincoats and rain pants! And I also need the grippy soles of the footwear for wet rocks, dry gravel, mud, and occasional ice.