Why would cloth provide any armor, let along an increase that huge? The basic light armor is either a simple leather jerkin or padded armor, neither of which would provide you with significant protection, so an increase from 10 to 11 feels appropriate.
<Coughs and dons Historian hat>
Padded armour was actually hugely more effective than D&D and other FRPGs give it credit for. A padded gambeson would turn sword blows and 'defeat' (actually mitigate rather than defeat) many blows from blunt weapons. Leather is another one. Light hunting leathers or fashion-weight leather would be marginally effective (and deserve the terrible AC it has) but thicker, armour-weight leather was amazingly effective. Witness the buff coat that lasted into the C18th in some European armies. It would stop most blades from penetrating. Damage was still caused by impact, but nothing was opened up to infection or cut off.
All that said, D&D has its own system of classifying armour, and who are we to change things at this stage. Leather armour in D&D 5e is AC11 (only marginally better than being naked), and you have to live with that.
