Translation:This actor looks ridiculous in this weird suit.
Clearly, this might be said by someone who has never seen a play before! However it should be "THAT" actor and "THAT" weird suit, because we are unlikely to have either the actor or the suite by us. They are both likely to be "over there" on stage! "This" could be used if we were looking at pictures of actors in a magazine or online.
my hachette does give several examples of 'avoir l'air' used as 'appears'.
"avoir l'air d'être/de faire" (to appear to be/to do)
"avoir l'air déprimé" (to appear to be depressed
"avoir l'air de pleurer" (to appear to be crying)
"avoir l'air d’avoir oublié" (to appear to have forgotten).
why The actor looks ridiculous in this weird costume is marked wrong? Drop down on definition for costume shows both suit and costume. The stage attire for the actor is typically referred to as costume. Perhaps, that's why the term costume design and NOT suit design is used on the show's credits.
generally duo uses more commonly used words and has a limited answer list. not a surprise for a course for basic learners. it could take the time to update that list with all the uncommon usages too. or the users can accept the ones that are used and let duo do more important things like keeping all the courses up to date.
"Ludicrous" seems to be a valid translation of "ridicule". However, it may be a synonym that the staff of Duo isn't familiar with. The only way they can be "educated" is to report your submission as being correct and that it should be accepted. That way, you can help improve the database.