It sounds amazing. I love being nude but in the US, this is sadly a rarity. I would much rather live in a society where nudism is normal, at least in public baths like this. It does make me wonder though, if nudism is that ingrained, do they even notice each other's cocks? If I were to visit with a 5.5" soft cock, and being white, would there be stolen glances at it as I moved from bath to bath?
(Thanks for explaining that towel...I was wondering....)
What I noticed was that, in an onsen, the locals hardly cast a glance at the other patrons.
I think this needs a bit of context. Generally speaking, the locals in Japan do not trim their pubes. Their long pubes tend to cover much that could be shown. I trim my pubes and shave my shaft and balls, but I hardly noticed the eyes of the locals linger at my boy bits. This is not to say they do not look - but it could be from the novelty of the trimmed pubes. I am of Chinese descend, so skin tone and facial features to not differ too much from the locals.
As for you being white, I would not be surprised if you would attract a bit of attention due to the different colour of your hair and skin tone. My experience in my various visits to onsens is that the locals are very polite and would not openly stare at the other patrons in the premises.
I do not think they will approach you because they probably perceive a language barrier.
I do not speak Japanese, so I cannot hold any conversation with the locals in the onsens in Japan, but I did observe a group of young Japanese talking and joking with each other.
I hope this helps, and I hope you would have an opportunity to enjoy a Japanese hot-spring and/or a public bath house in Japan in the near future.