I think you've put your finger on something important, but I don't think that it's just a bad thing that leads to an "embarrassing situation for everybody". Op

I think you've put your finger on something important, but I don't think that it's just a bad thing that leads to an "embarrassing situation for everybody". Opportunities to act differently for one day of the year are more valuable than that. That way, you can explore a side of you without being "inconsistent" with your usual public self, or get to know a different side of other people. Anyone can decide to dress up like a pirate on any given day, but most of will wait for Halloween to enjoy it.