I am ready to do another round of clothes though. I still have too much and nothing to wear at the same time. How does that happen.
Because your wardrobe contains items that you do not love. I don't have many clothes (about 60 odd items, including jackets and leggings but excluding shoes, socks, undies, bras and hats), but last year was the first year I felt like I have heaps of clothes to wear. I was ruthless with my wardrobe and only keep clothes that I love to wear. The high rotation clothes, stuff that you find yourself grabbing to wear without thinking cos you know you like wearing it. I still get rid of an item or two of clothes every 6 months or so as my tastes shift gradually over time, or my shape/size does. Most of my clothes go well with each other, so I can make many different outfits from not many clothes.
The method I used was to take each piece of clothing and ask myself (or got DH to ask me out loud - that works better for me), "do I love and want to keep this item?" If the answer was a resounding yes, then I kept the item. Any other response = get rid of it to charity.
Edit: Following up on your waste comment: doing this with my wardrobe REALLY helped with not contributing to more waste of money and environmental resources. It made me super concious of how bad I had been at buying clothes for myself. So now if I am in need of a new item of clothing, I ONLY buy it (whether from the op shop or new) if I really love it in the fitting room and can't wait to take it home and start wearing it. So yes, I do ask myself when trying on clothes, do I love and want to keep this, and I listen carefully to my gut feel. It's amazing how easy it is to try to justify something to yourself, when all that matters is if you love and want to keep it and use it.