Clothes that are ill-fitting are too big or too small — or maybe too big in some places, and too small in others. Your ill-fitting pants may require a belt to keep them from falling down.
An ill-fitting dress might be too short and too tight in the arms, and an ill-fitting suit might be big enough to fit two of you. When something fits, it's the proper size and shape for your body, and when it doesn't fit, it's ill-fitting. This adjective combines ill-, "badly" or "not well," with fitting, from the verb fit, "be fitting or proper" and "be the right shape."