I'm not the one who originally designed it that way, but for this year's Winter/Summer Bash, I decided to keep it in for this reason:
- It tells the user that hats can be worn out of bounds. If a user worries the hat might get cut after placing it, this white "canvas" help communicate it won't.
As to why hats can still be placed outside of this canvas: Think of it as a safe zone which if you place it correctly inside of the white space, it won't obstruct the interface (see image below). We allow to go even beyond because it's fun to break rules. And Winter/Summer Bash is fun.
It wasn't for aesthetic reasons.