What's it like in a Japanese bath house or spa? Does everyone walk around naked? Do men and women bathe together? I've heard that you aren't allowed in the bath houses if you have a tattoo. Is that true? What are the best bath houses or spas in Tokyo?
Yes, you're not allowed in with a tattoo. Japan associated tattoos with the mafia - so you're not allowed in. If you cover your tattoo with a band aid you (should) be fine.
Also, yes, everyone is naked. It takes some getting used to.
I think one of the best guides for foreigners using onsen is: