Silly in the extreme dressing dog in blue (6)
I believe the answer is:
smutty
'blue' is the definition.
(thesaurus)
'silly in the extreme dressing dog' is the wordplay.
'in the extreme' suggests removing the centre (the letters on the extremes of the word are used).
'dressing' is an insertion indicator (a dressing is a kind of covering).
'dog' becomes 'mutt' (mutt is a kind of dog**).
'silly' with its middle taken out is 'sy'.
'sy' going around 'mutt' is 'SMUTTY'.
'in' acts as a link.
(Other definitions for smutty that I've seen before include "Dirty" , "Filthy" , "Blue" , "Rather rude" , "Improper" .)