Husbands, Wives and Children being Naked / Nude
My wife and her brother got into a rather heated debate about the definition of modesty. My brother in law is a member of your church but my wife is not. He feels that modesty basically means nudity is a sin unless you are married. Even between married people, he feels he should "try to wear his garments whenever possible." We understand a little bit about the covenant a member makes but it seems extreme in our view.
He, for instance, is always fully clothed around his own children who are 6 and 4 (boy and girl). In our family, my wife doesn't parade around in front of our boys (also 6 and 4) but if they happen to walk into our room and she is naked, she doesn't freak out.
Do LDS people really feel modesty means being fully clothed around everyone at all times?
This is a rather individual matter. Also it, to some extent, can depends on the view of society at large.
After Jesus had died his disciples went fishing. We read the following _
"Therefore that disciple whom Jesus loved said to Peter, It is the Lord. Now when Simon Peter heard that it was the Lord, he girt his fisher's coat onto him, (for he was naked,) and did cast himself into the sea." John 21:7
So it would seem that there was a sense of feeling able to be naked when away from the crowds fishing, but a need to dress otherwise, in their culture. Also it is interesting to note that he felt a need to get dressed knowing it was the Lord. What does that suggest?
Today we live at a time when you can go down to the beach and see people with almost nothing on. But if those people walk into town that way they will be quickly told to get dressed. I strongly oppose such dress (or lack thereof).
I will go to the beach and there get dressed in only my shorts style of bathers that go most of the way down to the knees. Yet otherwise I dress from the neck down. I don't feel totally wrong in taking off my top to sunbath for health reasons, at home, if I feel no one will be offended or have wrong ideas in regards to it. But this is an extreme rarity.
I oppose showing of cleavage by women. I find that irresponsible. It sometimes encourages the wrong feelings in men; and women deep down know this. Though they will deny it fervently, even to themselves.
As to your children, you need to set a good example. "Train up a child in the way he should go and he will not depart from it." Prov 22:6 So think deeply about how you want your children to handle sex. If it is loosely then don't complain when you have to live with the results.
I don't believe it is good to "freak out" if your children accidently walk in and you are naked. How you take the situation reflects on how they are likely to take it. However it is wise to save the day by telling the child to leave the room or putting clothes on immediately.
I notice with General authorities of the church that their wives are always fully covered to the knees at least.
As to husbands and wives alone, it is left to the individual to search for spiritual wisdom. But I personally hold to what your brother-in-law has said.