The worn armor texture menu can be used to change the texture of the armor when the player equips it (the texture on top of the player skin, not the regular icon texture). In this menu, you can pick an existing armor texture, or create a new one. It should look like this:

• There will be a pink button for each worn armor texture you have made so far. Clicking any of them will select the corresponding worn armor and take you back to the armor edit menu.
• Clicking the 'Cancel' button will take you back to the armor edit menu, without selecting a new worn armor texture.
• Clicking the 'Create new' button will take you to the armor texture edit menu, where you can create a new armor texture.