Most Asian countries are actually very conservative and this was clearly making people very uncomfortable.
I agree. It makes me uncomfortable and it's rude and I believe many feel the same, especially here in Malaysia, where showing too much skin is generally frowned upon.
I first learned of the conservative nature of Asians when I first moved to Thailand and worked in SCUBA diving. When we were loading up our gear we would see Thai families at the beach as well and more often than not they weren't even wearing swimming suits... they were completely dressed in shorts and a shirt and this was especially true for the women.
I think that foreigners get given a pass at the beaches here because without them, there would be substantially less profitability for these beach areas. But once you are no longer at the beach, it is time to put your clothes back on, people :)
Yes, that is true. There are beaches where people can wear skimpy swimwear, usually famous touristy spots or resorts.