There seems to be no sense with how it is currently -

Is it newest first? Color-coded? Item-coded? I'm so confused with the layout. Is there a way to legitimately organize it so I can find what I need to find the first time around without having to search?
This is annoying.
Okay, so there's a couple of things you can do here.
First, judging by your screenshot, your items are currently being sorted by name - i.e., in alphabetical order. You can change this by changing the Sort By and Direction options. Personally, I don't use these much unless there's something that I just put in my wardrobe that I want to find immediately - then I sort by "Added to Wardrobe". Direction will just change it from either oldest to newest or newest to oldest - or in the case of "Name", from A to Z or Z to A. (I can never remember which is which, though - I always have to mess with it!)
Most of the time I just leave it in alphabetical order, and then when I want to dress my avatar, I use the Layer sorter. Some of them have odd names but most of them are self-explanatory: "Chest" is shirts and dresses, "Overchest" is sweaters and coats, "Neck" is necklaces and scarves, "Bottom" is pants, skirts, etc. Once you're familiar with what typically goes in which layer, it's fairly easy to find things.
However, it's still not perfect, and the more items you have in your wardrobe, the more of a downright mess it becomes. Something you can do to customize it for your own organization is to add Drawers. That's the middle top sort option in your screenshot. But before you can sort by drawers, you need to create drawers. To do that, go to the wardrobe, and then in the top line menu select Organize Items. From this new page you can remove items from your wardrobe or organize them into drawers by selecting the option Manage Drawers and creating them to your taste. This can take a long time if you really want to be serious about it, or you can just tuck some of your favorite items into a drawer so you don't always have to go hunting for them. I recently organized all my Head layer stuff into a few drawers so I wouldn't have to keep searching for wigs or hair accessories. I plan on doing something similar with chest soon so I can find dresses right away.
PROTIP: Last time I went to create a drawer, it said it was created right away, but it didn't show up right away. It seems there's a bit of delay. So if you do create drawers, I'd recommend creating a few, then doing something else for a while, then coming back and sorting. :)