The Hero Outfit resembles the green Kokiri tunic and hat worn by Link in the Legend of Zelda game series. It consists of the Hero's Hat, Hero's Shirt, and Hero's Pants. Like all vanity items, the full outfit doesn't give any stats even if equipped in the armor slot.
This vanity set is based off of Link in the Legend of Zelda series.
In the console version of Terraria the colour scheme is changed from green to purple, due to copyright issues with Nintendo.
In 3DS version it remains green, probably due to the fact the 3DS is a Nintendo console, and Legend of Zelda is made by Nintendo. Oddly enough however, it is still crafted with Purple Thread.