She looks truly beautiful in a kimono.

Literal

She [topic-は] Japanese-clothing [object-を] wearing, truly beautifully appears.

和服 (わふく, literally 'Japanese clothing') is a formal collective term for traditional Japanese garments — kimono, yukata, hakama, and other styles. 着て is the te-form providing background manner — 'wearing it, she appears beautiful.' 実に (じつに) is a literary intensifier meaning 'truly, indeed.'