Yes.

It's like littering on the mainland.
Wrong to do: yes
Disliked by the locals: yes
Illegal: yes
Enforced by authorities: depends

Respect the custom, dress appropriately, avoid issues and enjoy your vacation.

Hmm, that just really doesnt make sense to me. Does this pertain to guys as well. I mean it makes sense if it were only females. ?

yes it pertains to guys as well.

Yeah, but guys can usually get away with wearing their suits of bathing because they look a whole lot like shorts. I wonder how women's olympic volleyball players sit among the local mores?

Gee, I never quite understand why this is an issue. It's pretty much the same as most places stateside - would you wear your bathing suit (women or men) to go shopping or walking around in your hometown? Men, do you go around town in just your trunks and no shirt?

Funny story - I once saw a tourist off a cruise ship who was wearing a heavy terrycloth bathrobe (ship's issue, I presume) and flip-flops while shopping. If you don't think that raised the eyebrows of everyone (non-locals like myself included)..... And boy, she must have roasted as is was a bright, hot day. What are people like this thinking?

Guys, you can get away with your swim trunks (no Speedos's please) and a shirt. Bare legs are not an issue - bare chests are. Women, I have seen women around with a see-through pareo over a one piece and even this draws some stares. It is an act of respect to cover up - think of visiting your grandmother.
Pamela