The latter one, in conjunction with body hair, is important - sims still look a bit doll-like when it’s just genitalia without hair, though obviously that type of bodyscape might be someone’s particular preference. Hardcore Sims players may know about the wide variety of nudity mods that have popped up since the “no mosaic” mod - but in case you’re not caught up, there are now mods that let your sims have penises, vaginas, areolas, and even pubic hair.
Naturally, it was only a matter of time before someone took matters into their own hands and changed that. When players modded the censors covering characters up in The Sims 4, they found that sims were pretty much Barbies underneath the clothes.