Many people, but not all, will dress up for the Mickey’s Not So Scary Halloween Party. It is fun to wear Disney costumes, but it is in no way required.
Disney does not prohibit costumes, but they have expressed these guidelines to guests: remember this is touted as The Happiest Place On Earth, and there are so many young children in the parks, so they do not want you to wear anything that would be very scary to children; you are not permitted to wear a mask or face covering that makes it impossible for you to maneuver your way through the park without help from someone else.
Your walking cannot be impaired. Your sight cannot be impaired. You should not use materials that could be used as a weapon. You can’t confuse other guests who may think you are somehow an official Disney character and want to take photos with you and get your autograph. You can’t show up on an ordinary day wearing a fairy costume, yet have tattoos all over your arms, because Disney cast members are not allowed to have any tattoos that would be seen by guests.