Trace item of underwear, in grey oddly (7)
I believe the answer is:
vestige
'trace' is the definition.
(I know that trace can be written as vestige)
'item of underwear in grey oddly' is the wordplay.
'item of underwear' becomes 'vest'.
'oddly' means one should take alternating letters (letters in the odd-numbered positions are used).
'in'+'grey'='ingrey'
The alternate letters of 'ingrey' are 'ige'.
'vest'+'ige'='VESTIGE'
(Other definitions for vestige that I've seen before include "(Last) trace" , "'Shadow, trace (7)'" , "Residual trace" , "Slight amount, trace" , "Lingering trace" .)