So you swap clothing around to other parents who have younger kids, in exchange from clothing from people with older kids?
There's a very solid ecosystem of clothing/shoes/etc moving around our church, and it's quite common to see someone wearing clothes that our kids used to wear, or seeing our kids wearing that was passed down from someone else.
There are certain ages/genders that you find a bit of a gap in (a typical 4 year old boy will destroy their pants before outgrowing them), but... stuff goes around in regular loops. "Kitchen trash bags of good condition clothing" regularly go between cars on Sunday morning or at other gatherings.
I'm sure there are some people who buy new clothing for their kids at ever size and then discard it when it's worn out, but that's just pissing huge amounts of money down the drain for no benefit in the slightest.