As I mentioned earlier, I like to keep the next size up of clothing in the main dresser to encourage knowing what I have in the next size so I’m not surprised by anything missing. For the clothes even bigger than that, I like to put them into boxes in the kid’s closet. Listen, I’m not going to buy any fancy boxes for this purpose:
I’m just going to use what I have. Since obviously I have lots of diaper boxes destined for the recycle bin, I like to use them with some duct tape labels. In our house, there is no need to get that fancy since all of our old clothes go to a cousin that is a little smaller than our kid. If you want to buy some plastic bins to rotate the outgrown clothes, then you absolutely should!
If I used the smaller and bigger bin technique, I would have the current size and bigger size in the closet. Let’s say I have a kid currently in 3T clothing. I would do the 3T and 4T in the dresser with bins in the closet labeled 3T (mainly empty, but slowly filling as random items slowly get smaller on the kid) and 5T, 6T and above. Once all the 3T is in the bin, it can be moved to the basement, storage, garage sale pile, etc. Then the 4T moves up to the main drawer, 5T gets to the back up drawer, and the 5T bin in the closet becomes 4T as the kid starts outgrowing them.