To say that the nudity flag is only used to alert of sexual situations is not only wrong, but absurd.  Sure, SOME people might have their account set to not view nudity because they find all nudity to be sexual, but some folks are just not into being bombarded with it, plain and simple.

Our TOS encompasses all humanoid characters, and has done so for over half a decade.  

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Knowledge is knowing a tomato is a fruit. Wisdom is not putting it into a fruit salad.