Why has this dress been met with surprise at the Oktoberfest in Munich?

The existing answers and comments explain the situation quite well, but for completeness I just want to add a picture of what is evidently the model for your wife’s costume:

^source

Practically every detail matches. This costume is currently on sale for 17.85 USD at AliExpress, described as “Womens Sexy Beer Girl Maiden Oktoberfest Bavarian Halloween Dress Dirndl Costume”. As the description makes clear, it’s a sexy Halloween costume based on the Dirndl. You can contrast this with the images of actual Dirndl posted in other answers.

For comparison, here’s a nurse’s uniform on sale from the same supplier:

^source

So, it really is as Jan and others have said: your wife had the misfortune to model her creation very closely on a novelty “sexy” version of the traditional dress, and it stands out in much the same way as the nurse’s uniform above would stand out in a hospital.

Answering from a non-Bavarian point of view, your wife more closely resembled a Funkenmariechen than someone wearing a Dirndl. The former is the name for female dancers in a specific costume of a different German tradition from a completely different region of Germany.

Just google for pictures of Funkenmariechen. They are typically bright blue or sometimes red with white often visible underskirts at less than knee length. A three-pointed hat would have made that outfit almost perfect, except for the black top and too few ruffles.

The associated tradition is the carnival, which is a bit different in Germany compared to Brazil. Think of a Brazilian carnival’s Samba dancer showing up in any other region and time to a party.
Would she get looks?

Well…it has no meaning as “dress code”, it simply looks wrong.

Here a picture of actual “diandlgwand” (girl clothes) with different
cuts of colors:

and here the short form:

• All clothes have one-piece (!) skirts which at least reaches the knee,
  very often combined with a apron.
  Your wife skirt is too short and it is not one piece: it shows a second
  skirt under the first one. This is…unusual.

• The skirts have all muted colors, even the brights one are pastel ones.
  The skirt of your wife has a loud color, a very strong red which is
  very unusual and stands out (not positively). You can wear bright colors,
  but not in Tracht.

• The length of the skirt is not only short, it has the wrong length, it
  does not really fit. The black top reaches some part over the waist, so
  to get a harmonic impression, the skirt must be either longer or if you
  have a short skirt, the top recedes back over the waist. The combination
  of your wife does not look good for German eyes.

There is no meaning in the ‘dress code’ of your picture — simply because there is no dress code involved. Your wife attempted to look like the locals — wearing a Dirndl — but failed absolutely miserably at it.

Traditional Dirndl are ankle-long, come with an apron and don’t show the underdress. The underdress (clearly visible in your picture) is essentially underwear. It’s not like underwear is never seen nowadays in Europe, but in your case it is still kind of a ‘Oh my god, how could she fail at that?’ Another factor contributing is the very short skirt length (although unfortunately, that is no longer a rare sight at the Oktoberfest).

If you want to see what actual Dirndl look like, Google Trachtenumzug (traditional dress procession is the closest translation I can think of). Or follow links such as this one. (I’m not directly linking the pictures since I’m not the copyright owner.) Side note: Highly unlikely that all those girls are widows hence the ‘bow tradition’ is a modern invention.

I guess that I’ve found the answer of my question, the catch of this dress is the “bow”:

*Dirndl apron bow in the middle

Tying the bow of sexy dirndl dresses this way can attract a lot of incredulous looks, especially when the wearers themselves don’t know its meaning. Different from what you might think (left-free, right-taken, middle-unsure?), these women are definitely not uncertain about their marital status. The Dirndl bow in the middle signals: I am a virgin.*

The funny fact is that her bow was not in the waist as the tradition says, so was unfair! haha

I’m not sure I completely understand the question, but if it is “Why has this dress been met with surprise at the Oktoberfest in Munich, I see two points:

• Comparing to pictures of random dirndls the white underskirt strikes me as very long and visible, it is typically not or barely visible/there.
• Also the typical apron is missing.

See Wikipedia on Dirndl for a start.