> this says to me people are being perfectionists when it comes to fit

I guess this is one of those times when we have to recognize that humans are not a totally homogenous species with identical habits and desires. Believe it or not, there are many people in the world who couldn't care less which OS or text editor they use nor even how the configuration should be adjusted to suit their tastes and workflow. They would be absolutely mystified by all the discussion that goes on in these parts about different Linux flavours, tabs v spaces, vim v emacs etc etc.

Now imagine that kind of complexity and nuance applied to products that you are relatively indifferent towards. There are thousands of people out there who care about every single detail about a piece of clothing, not just being the perfect fit (yes, that does matter to a lot of people, rather than "it'll do"), but also the exact colour, texture, fabric, stitching patterns, quality of manufacture, the style of the cut which may look good on a model on the website but just doesn't suit the person's own body at all. Have you ever wondered why so many people (often, but not exclusively women) can spend an entire day shopping for a single garment, visiting so many different stores, trying on so many apparently similar items before being satisfied with just one (and even then, sometimes still regretting the purchase afterwards). Buying clothes, for many people, requires trying on so many different alternatives and making a considered decision. And in all the details above, there is often a big difference between what is perceived from the website images vs the reality of the garment when it is held in the hands, examined in detail, tried on the individual person.

"Free returns" has enabled a behaviour I have often seen in friends and family: order lots of different items with the clear intention of sending at least half of them back, perhaps more, knowing in advance due to the nature of online retail that at least some of those clothes will simply be disappointing when seen up close, others will be a terrible fit, and yet others will sort-of fit in a way that pleases many people but somehow doesn't yet feel right. They are using their homes as the changing room at the store. The paradigm is not "decide what to buy before ordering, choose only one item and only send it back if it is egregiously disappointing", rather "order a whole range of items to try on and assess, then keep only the ones that really please me."

I'm not saying this is good or bad, simply trying to provide some explanation to address your "how in the world" question. Free returns has, until now, enabled this behaviour in consumers which probably drove a lot of growth among skeptical buyers by allowing them to mimic the live shopping experience (try on lots of stuff, keep only a few) at home. If this isn't economically viable, then I guess consumers who are now a lot more acclimatised to online clothes shopping will have to adjust having some of the risk and inconvenience pushed back in their direction. Or, they will choose stores that offer them the service they have become used to while other consumers like you will probably choose a different retailer with lower prices overall but a stricter return policy. Or someone will invent some new kind of financial model, like an opt-in "returns insurance" or Prime-style subscription fee that allows unlimited "free" returns only for those customers who value that experience. Who knows? It's a shift in the market which as ever will be fun to watch.