I've been to a public bath house in Korea, Used to part of the world cup stadium.

They had separate areas for men and women[duh!] and inside was basically a hot pool area and everyone was naked. [everyone=women] It was pretty weird at first, and you get pretty self conscious. But i thought to myself, I'm probably never gona see these people again, so you kinda relax. Those old ladies have amazing figures for their age. >.>

Just to clarify:

I meant that when you are in the Onsen, you must be de-clothed, naked.

When you are out, it is usual to cover up, although no rules in place to prevent this.

My experience was that some women would stay naked when out, and other's wrap the towel..

I certainly didn't mind either way, but that's just a personal confidence thing