Ah, that explains the confusion. This isn't the Farmer Sprite System that you're commenting on. This is a different asset.
To answer your questions, the Sprite Customizer just creates a flattened version of the layered clothing sheets, with custom colors. This is useful for devs who are not making a paper doll system. You still need to create the animations in your game engine. Consult the included animation guide for help with that.