Yup that is the "donor bone" method (the usual method for setting up conformers).  If the clothing mesh is grouped close to the same as the character, then the deformations will be close to the same.  As wdupre said you can try adjusting the way the clothing is grouped to try to get a smoother bend, but with a hip -> buttock -> thigh arrangement you may still heave some problems when moving the thigh bones a large amount, producing a sharp  break where the buttock polygon group joins to the hip group.

If the character has joint controlled morphs tied to individual bends, these need to be reproduced in the clothing also, for every bone and rotation axis that has them.  Sometimes if the clothing model is loose-fitting enough, you can get away with skipping some of these.

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