Disney Beauty And The Beast Costumes

Confusion about copyright?

For example, on sites like Etsy people recreate costumes (Beauty and the Beast, Peter Pan) or create artwork and then sell it isn’t this illegal? Wouldn’t it be illegal to sell anything related to any of these Disney characters or anything simliar? I’m so confused about this because I thought that if you were making money off of someone else’s creation, it was illegal.

It is illegal. While Disney cannot keep tabs on things that are not advertised or made public; if they get wind of something that is being sold on e-bay or elsewhere that has a public forum, they will sue for no less than $250,000 for EACH depiction.
And that goes for illegal downloads of Disney trademarked videos, etc…