How It's Our Fault:
Despite what the censored porn might imply, nudity has never been taboo in Japanese culture. Not only were women used to walking around topless, but what we call porn was just another common genre of books, like cooking or travel. Japanese porn, or shunga, was a traditional form of visual media that had no stigma attached to it. Most artists created it without violating any type of social code. They were just making pictures of people f****n'.
Just the way God intended.
It was only in the 19th century, when Western morality came to Japan, that the Japanese government decided to crack down on such traditional practices as public nudity, in order to make the case to the West that Japan was totally a civilized country. By the time World War II rolled around, Japanese porn had gone from an everyday part of Japanese culture to a demonized art form that, as the Pulitzer-winning expert John W. Dower noted, now inexplicably valued idealized Western versions of beauty, like long legs and big tits.
After the war, the Americans occupied the country and enforced American cultural values. This further stigmatized porn in Japan, to the point where they enacted one of the strangest porn laws in the world: It's OK to have sex on camera, but any display of genitals is strictly forbidden. So now all porn in Japan has the genitals pixelated out.