I don't know for sure, but I think it may be a combination of environmental, nutrition, and stress conditions. For instance, my girl was a wild caught Florida horse. Most likely she was taken from an area with a lot of Sargassum....her cirri and initial coloration looked a LOT like sargassum weed. While I was deworming her she lost most of her cirri...she was in a bare tank with very few decorations and relatively low-nutrition food. When she was introduced to the main tank and finally switched over to mysis (higher protein and HUFAs) she gained SOME of her cirri back, but they went away again to some degree after a few more weeks. Now that I've introduced a good portion of caulerpa macroalgae in the tank, she's hanging out in the macros all day long, and her cirri are getting a little longer around her head again.
All this is interesting, but I wonder if the longer cirri may also be a stress response. I'm merely guessing, but since there are no predators in the tank, is it possible that some metabolic process is inhibited, thereby keeping the cirri from growing? Stress hormones can do interesting things without our immediate knowledge, so it's worth a thought. Then again, it could be much simpler. Perhaps I'm just not providing something she needs to keep the cirri growing.
We know for a fact that a lot of the dwarf and pygmy seahorses are specifically evolved to emulate certain types of coral and gorgonia. There was a fantastic CORAL article about pygmies a few months back with some beautiful pictures of tiny seahorses that looked just like the gorgonian they were hitched too. It stands to reason that the cirri are part of a camo response, but I really wonder if it also depends on whether or not the horses think (on an instinctive level of course) that they NEED the cirri.