Lina is not presented as a plain woman. She's presented as a beautiful woman who chooses at first to look dowdy, but the second time that Johnny sees her on a horse in a riding outfit, he sees that she's beautiful.
At most, Lina's dowdiness is a result of shyness, but she knows she's beautiful and knows how to dress in a way that shows off her attractiveness.
I don't think it accurate to suggest that Lina appears dowdy throughout the film. And not only in the way she was dressed at the party. While in some scenes she was more conservative than others, it was really only the first scene in the train that she dressed so plainly.
Of course that sets up the comparison to when Johnny sees her the second time, with Lina riding the horse, and there Joan Fontaine gives the most incredible, radiant smile, one of all cinema's most beautiful faces. The set up in the narrative of course compares the two scenes.
On one level the film suggests that Lina does not get the male attention she otherwise would (I don't even say "might" here, she would get it) if she was not shy and as it were "got out" more. But in the specific scene in the train I have always thought her appearance was intended to allow her to travel without drawing unwanted attention. Yes on first viewing the suggestion is there that Lina doesn't know how to look good, but we subsequently see that is not correct. I think she merely looked as she did in the train to make it more likely she would not be bothered.