Eh, it specifies 'nearly naked' as an option, so I'd imagine even the most restrictive MC would allow skimpy enough underwear/bikini.
Really, it's pretty clearly a conceptual limitation, basically the inverse of the limitation of normal, worn, Armor 2 armor. When you're wearing Armor 2 armor, people react to you differently...you're wearing armor, after all. When you're using Impossible Reflexes for Armor 2, people react to you differently...you're nearly naked, after all.
In both cases, the primary point seems to be that, in order to benefit from Armor 2, you need to be dressed oddly for day to day interactions, rather than in something that's within the normal range of what people wear most of the time. Either way, you can describe it however you like (within reason), the primary issue is that you'll get funny looks walking around like that. At least, you will most places.