My quick search online shows "auslassen" to mean "to let out a garment". If that's the case, then my pseudo-educated guess is that the English should be "The tailor leaves the skirt large", and the German version of letting the skirt out would be "Die Schneiderin läßt den Rock aus." But you might want to wait for the Duolingo Mannschaft to voice their opinion(s).
I'm thinking of "den Rock groß lassen" / "keeping the skirt large" as opposed to taking it in, making it smaller or more tight. In that case it should maybe be "Die Schneiderin lässt den Rock weit".
It's correct that "auslassen" means "to let out a garment" but I think in that case both sentences should be different, for example "The tailor lets the side seam out 2 centimeters" - "Die Schneiderin lässt die Seitennaht 2cm aus" (though I find it more common not to use "auslassen" and instead say "Die Schneiderin macht die Seitennaht 2cm weiter" or "Die Schneiderin gibt in der Seitennaht 2cm hinzu").