In the old days, cotton was the most common fabric for clothing, and a lot of shirts and dresses, including school uniforms were white cottons. Due to aging process and effect of UV light from the sun, white cottons slowly but surely turned yellowish.
To counteract this, a blue powder – usually sold in compressed square tablets – was dissolved into a bottle of water, and then the blue solution mixed with the final rinse water for the clothes. The blue lotion imparted a slight bluish tinge to the wash, and when the laundry is strung up to dry in the sun, it caused the white color to give off an extra brilliance.
Nowadays, modern detergents have little blue particles in them that work much the same way. I doubt one can find the old school Laundry Blue on sale now.