Closet cosplay, also sometimes called casual cosplay, is the idea of making cosplay costumes using items you could easily find in your closet. Of course, you may not have the specific things you need in your actual closet, but you could probably find them at thrift stores or online--it's all regular clothes, not specific costume pieces. From there, you can modify them to be more specific to the character and to your fit, if you want, and add accessories you make or find to help add to the overall look.
The great thing about closet cosplay is that there are tons of characters who already wear regular clothing, but also it's pretty easy to find fanart of characters that don't in casual wear. This also leaves room for doing alternate universe (AU) versions of characters, such as popular concepts like flower or coffee shop AUs. Disneybounding can be great inspiration for closet cosplays too; the idea is that since Disney parks don't allow exact character costumes, visitors often will create outfits out of regular clothing inspired by the different Disney characters.
It's often said that closet cosplay is a great way to dip your toes into the cosplay world, and while that's true, I don't want to make it seem like only beginners do it! Closet cosplay can also be a way to have a comfortable costume that's not as high maintenance as other options, which is great at in-person events when you want to still be in cosplay but don't want to deal with the difficulties of another costume you have. Closet cosplay comes with its own creative challenge, so get out there and give it a try!
While there's no exact perfect book discussing how closet cosplay itself works, there are some great books on how to modify or alter existing clothes which can be very helpful when searching for closet cosplay options.