And, as Culator pointed out, it looks like a big pool of urine.
And about the whole Sally thing, she's covered in fur and she's a chipmunk/squirrel thing, so the reproductive organs are naturally hidden.
I know, and she goes around without pants anyway. But for some reason, when she is without her boots and vest, she seems naked. Princess Sally isn't the only character to be like this; oftentimes with nearly-nude characters, we take what little they wear for granted until it's gone. Suddenly, Sonic is without his shoes or Knuckles is without his gloves... My god, put some pants on, you two! Nevermind the fact they are naked to begin with.
This also happens with Disney characters. Donald without his shirt? EGAD! It's that one little article of clothing that gives the characters the appearance of being clothed, and when they are without it, they are suddenly naked as the day they were born.