Plus-size is a fashion victim no more. As newcomers jump into the space and established retailers expand their offerings with new collections and collaborations, the $20.4 billion category is finally having a moment. And considering the average American woman is 166 pounds and a size 14, according to the most recent Centers for Disease Control and Prevention report, it's about time.

"You've got retailers giving plus-size women real options in fashion—not just clothes that feel dowdy or oversized—trendy clothes that are made for her," said Hans Dorsinville, exec VP-senior creative director at Laird & Partners, a 13-year-old agency that works with a host of retailers including Lane Bryant.

Sales of plus-size apparel have increased 17% to $20.4 billion in the last three years, according to market research firm NPD Group. Last year, Target answered scores of customers clamoring for more sizes in its designer collections with its first dedicated plus-size brand, Ava & Viv. In May, JC Penney debuted its own line, Boutique+, and plans to partner with designers on capsule collection offerings. Online brands focused on the category, such as five-year-old Eloquii, which was formerly owned by the Limited, and Gwynnie Bee, a Netflix-like subscription service that rents out plus-size apparel, have attracted millions in venture capital. Even celebrities including Melissa McCarthy now have their own lines.

But with growth comes a marketing dilemma as brands grapple with how best to represent their wares at a time when decades-old terminology may now seem as passé as poodle skirts and sweater sets. Some consumers believe that the days of "plus-size" as a descriptor should be over, since the category encompasses the shopping majority and now has more options. Meanwhile, marketers are trying to acknowledge the trend by adding more size diversity to their advertising.

In October,
Modcloth, an online seller of vintage-inspired apparel, announced it was ditching the "plus-size" distinction and simply adding extended size options to its in-house line.

"Wondering why we aren't calling it 'Plus' anymore? Well, some folks really don't like the term," the company wrote in a blog post, noting the issue was hotly debated. "Ultimately, we could all agree that shopping categories should be defined by types of clothing, not types of bodies."

Many in retail are divided on the issue. But the majority said they'll continue to use "plus-size" in their marketing, if only so consumers know where to shop. Complete eradication of the term could lead to more confusion, many said. Earlier this spring, JC Penney sent out emails announcing the launch of its new plus-size line, with the phrase in capital letters.

"If I had it my way, I would never call it 'plus-size,'" said Sheeba Philip, VP-marketing, strategy and communications at Plano, Texas-based JC Penney. "We use it as a term because it's something to help classify."

The retailer recently ran a three-and-a-half-minute digital video promoting self-acceptance and empowerment. The spot, called "Here I Am," featured plus-size influencers, including "Project Runway" contestant Ashley Nell Tipton, who is designing a capsule collection for the Boutique+ line. "The bodies don't need to change—the attitude does," a voice-over in the video says.

Ms. Philip said that a goal of JC Penney's new brand message is to showcase authenticity; using real people in the company's marketing reflects that strategy. "We are really about authentic, real people and relating to them in a real way," she said.

Eloquii, which relaunched as an independent entity two years ago, has found that its best-performing marketing assets feature actual customers who are larger than typical plus-size models.

The company updates its trend-driven assortment with about 200 new styles every month, and saw revenue grow 165% last year. In May, Eloquii, whose name combines "eloquent" with "soliloquy," debuted a section on its site that spotlights user-generated content and includes a monthly customer feature. It's the brand's way of adding more reality to its branding, said Kelly Goldston, VP of marketing.

Many trace the drive for authenticity back to Dove's "Real Beauty" ads of the last decade. The soap brand's embrace of body diversity, along with "just be yourself" messaging, has reverberated across the apparel industry, particularly in the plus-size sector. Earlier this year, Mattel rolled out a line of Barbie dolls in a range of shapes, like curvy, petite and tall, and skin tones to industry applause.

Laird & Partners' Mr. Dorsinville noted that in recent months, he's seen modeling agencies integrate their plus-size models with their so-called straight-size models rather than separate the two by category, as done in the past. "It's become much more prevalent," he said. "Little by little, there's this acceptance."