Are you talking about fresh damp clothes?
Or well aged damp clothes?
Moist clothes are quickly colonized by yeasts and molds. Molds have a repulsive smell to humans, perhaps as an adaptation to determine the difference between fresh and not-so-fresh foods.
If you are talking about "fresh" clothes, then the moisture is aiding with volatilizing noxious odors. And, while one habituates to one's own body's smell, one may find sweaty clothes from another person as foul smelling, or perhaps after a shower, one looses that habituation and even finds one's own clothes as being smelly.