Yes, you can be naked in public anywhere in a Mature sim, according to Linden Labs rules, but there are limitations. Erections are for sex and so even though we may all enjoy a good stiff one here and there, technically it is not allowed in public places, and so masturbation and ejaculation with XCITE! and similar parts should be done in private areas.
The real intersting question is, "Does the owner or renter of a Mature rated sim or region have the authority make up "No Nude" rules and overide Linden Labs policy?" The reality is, right now they can ban/eject you for any reason at all. They don't have to be fair or give you a warning" Some strip clubs want you to tip the dancers to get nude and don't want competition from the customers who get naked for free.
You can always leave if you are asked to get dressed, but this usually makes them angry and hit you with the ban hammer, which makes no sense scince a nudist won't waste their time in a repressed venue, go ahead and ban us from places we don't want to go to!