Ok, played a few more quests last night with my, now level 22, character, still no nudity found in the world. I am in Cimmeria, the cold northern mountains, so perhaps I'm in the wrong place. I'm bringing up a currently level 6 Stygian character and perhaps when he hits 20 and travels to the warmer climes we'll see something.
I did experiment some though. The settings do include an "Enable Mature Content" toggle. It was defaulted to "On" though, so I've been playing with it on to date, with the experience I've described. No nudity so far. Tomorrow I'm going to turn it off and see what difference it makes.
Also, I created a female character, an Aquilonian Ranger. Yes, if you take her top off, she's nekkid, with anatomically correct features. It's hard to wrap my head around the glee this feature of the game has engendered but we all remember TombRaider so I guess it was predictable. Removing her pants revealed, essentially, a barbie bottom. I put her bikini back on her and beat a few people to death with a broken galley oar before logging off for the night.