When I lived in Belgium we would wear our normal clothes for all cycling. In fact it was odd for me to even think about wearing active clothes for biking. We never got real sweaty riding the way we did, but we were also teenagers. It was leisurely, for transportation, and sometimes I really miss wearing normal clothes on a bike (I don't have a bike fit for normal clothes currently).

I might also add that Bruges was completely and utterly flat. The biggest hills around were the canal bridges! I suspect other cycle chic countries like Denmark and the Netherlands have similar topography.