Oh, my dear, sweet summer child, they're not talking about Skyrim. When people say "horse armour" they're talking about one thing:

In the year of our lord 2006, when Skyrim was still half a decade away. the Xbox 360 release of The Elder Scrolls IV: Oblivion had a $2.50 "DLC" for two sets of horse armour, and it was roundly mocked for it. It wasn't the first microtransaction, but it was certainly the first one that set everyone talking about its absurdity. The conversation was absolutely about charging money for cosmetics. In fact the general tone was, perhaps ironically, the opposite of today's prevailing zeitgeist; this was a time when people were accustomed to spending $10-20 for a sizable "expansion pack" or "content disc", and the idea of dropping $2.50 for horse armour that didn't even do anything was absolutely ludicrous.