it is "irons" when it concerns to clothes. The complete expression is "passar a ferro" - "ferro" is Portuguese for "iron".

Why not " she outfit clothes"

Well, it would be exactly the same way, in the sense "she gives the clothes to someone else". You will need context to get the right meaning. The verb "passar" has many different meanings, I think Duolingo is just trying to teach you that "ironing" is one of them.

"Passar" can also mean "dealing", as in dealing drugs. "He deals drugs" is "Ele passa droga".