She has so far displayed only one thing I gave her, a shirt. A garishly pink one that I hoped she wear rather than display. Other than that, she just doesn't seem to display anything else I give her in her home. I am trying to match the aesthetics of her place, but no dice. If she keeps this up, I might trade her for a camper at some point. LET ME LOVE YOU WEIRD GYROID RABBIT
Villagers start to display clothing in their home after you give them a certain amount... for me, it always seems to be after I give them three items or so, but Lucky seemed to display a Bone Shirt earlier. They also automatically display any hats you give them. HOWEVER- they will STILL wear them (both hats and displayed clothing). In fact, they can have them displayed AND be wearing them at the same time, if I recall.
As for furniture, they have limits on what they can display and how/where. There's a guide... but I'm not sure I have it saved. Lemme check.
It's kind of complicated (I don't understand half of it but, then again, charts always seem to make my brain shut down) but if you go under "items" (at the bottom) you can see a full list of items, which will say whether or not a villager can display said item, and if it can be placed on tables or whatever.
Also, they NEVER display wall furniture. Ever. Unless it's also a door decoration, in which case it goes on their door. They sometimes may hang clothing on walls, though.
Here is the furniture replacement guide for all villagers. Unfortunately for Coco, as you can see in this diagram, she only has one 1x1 "room marker" (the empty red box) in her room where she can display items, so it would usually be clothing that she received. Any furniture bigger than that wouldn't fit in that room marker. She would display items in the room marker first before replacing any of her existing furniture, and only furniture within the right category could possibly replace her current ones.
I have Coco and she can definitely display more than one 1x1 item (depending on what it is). She's got room for one on the floor, at least one on her "chairs" (I just forgot the item name) and at least another on the table. I don't think she's removed any of her default furniture either. I hope this helps! I think if you send her a floor item she won't display the shirt on that spot all the time but she'll still be able to do it. My villagers seem to rotate the positioning and visibility of that kind of item. And like someone said, they can display shirts and accessories but they'll also wear them sometimes.
