Salam sister Truthseeker,
Your interpretation of modest dressing makes sense.
![Smiley :)](http://quransmessage.com/forum/Smileys/default/smiley.gif)
However, certain regulations may be controlled by the standards of the society we live in (and you've alluded to this as well). I think the main rules of dressing are: (a) decency as per society, (b) covering anything with a sexual connotation, and (c) wearing the "clothing of piety".
![Cheesy :D](http://quransmessage.com/forum/Smileys/default/cheesy.gif)