Directly from the soc.culture.jewish FAQ:
What’s this I’ve heard about a hole in a sheet?
We don’t know what you’ve heard, but what we’ve heard is that when it comes time for three men to “witness” a woman’s conversion (involving nude immersion), what’s commonly done is for the water’s surface to be covered with a thick, opaque sheet with a hole in it, just big enough to let her head through while discreetly shielding the rest of her body.
Anything else is probably just your warped imagination, and no, we still have no idea of what you’re thinking, but you should be ashamed of yourself, just in case. And another thing, it’s not true, so there.
Actually, there is an urban legend regarding what you think. As with any urban legend, there is a spark of truth in it. Here are two explanations:
[ul][li]The myth derives from seeing Jews in religious neighborhoods hanging their “talitot katan” out to dry. This poncho-like garment is about two feet by four feet, has a fringe on each corner, and a hole in the center for the wearer’s head, and it looks somewhat like a small sheet with a hole, and many people have vivid and warped imaginations.[/li][li]There is such a practice, but it is based on a misreading of the Kitzur Shulchan Aruch, a poor source for information on mainstream halakhic opinion on sexual matters. Most consider the legend to be an incorrect practice. Nevertheless, the practice does seem to survive in some “fanatical” extremes of Orthodox Judaism, without Rabbinic agreement.[/ul][/li]For either husband or wife not to be nude during sex is not only wrong, it’s grounds for divorce (Ketubot 48, Shulhan Arukh, Ever haEzer, 76:13).
“Kings die, and leave their crowns to their sons. Shmuel HaKatan took all the treasures in the world, and went away.”