When I implemented the pixelation censorship effect in The Sims 1, I actually injected some random noise every frame, so it made the pixels shimmer, even when time was paused. That helped make it less obvious that it wasn't actually censoring penises, boobs, vaginas, and assholes, because the Sims were actually more like smooth Barbie dolls or GI-Joes with no actual naughty bits to censor, and the players knowing that would have embarrassed the poor Sims.

The pixelized naughty bits censorship effect was more intended to cover up the humiliating fact that The Sims were not anatomically correct, for the benefit of The Sims own feelings and modesty, by implying that they were "fully functional" and had something to hide, not to prevent actual players from being shocked and offended and having heart attacks by being exposed to racy obscene visuals, because their actual junk that was censored was quite G-rated. (Or rather caste-rated.)

But when we later developed The Sims Online based on the original The Sims 1 code, its use of pseudo random numbers initially caused the parallel simulations that were running in lockstep on the client and headless server to diverge (causing terribly subtle hard-to-track-down bugs), because the headless server wasn't rendering the randomized pixelization effect but the client was, so we had to fix the client to use a separate user interface pseudo random number generator that didn't have any effect on the simulation's deterministic pseudo random number generator.

[4/6] The Sims 1 Beta clip ♦ "Dana takes a shower, Michael seeks relief" ♦ March 1999:

https://www.youtube.com/watch?v=ma5SYacJ7pQ

(You can see the shimmering while Michael holds still while taking a dump. This is an early pre-release so he doesn't actually take his pants off, so he's really just sitting down on the toilet and pooping his pants. Thank God that's censored! I think we may have actually shipped with that "bug", since there was no separate texture or mesh for the pants to swap out, and they could only be fully nude or fully clothed, so that bug was too hard to fix, closed as "works as designed", and they just had to crap in their pants.)

Will Wright on Sex at The Sims & Expansion Packs:

https://www.youtube.com/watch?v=DVtduPX5e-8

The other nasty bug involving pixelization that we did manage to fix before shipping, but that I unfortunately didn't save any video of, involved the maid NPC, who was originally programmed by a really brilliant summer intern, but had a few quirks:

A Sim would need to go potty, and walk into the bathroom, pixelate their body, and sit down on the toilet, then proceed to have a nice leisurely bowel movement in their trousers. In the process, the toilet would suddenly become dirty and clogged, which attracted the maid into the bathroom (this was before "privacy" was implemented).

She would then stroll over to toilet, whip out a plunger from "hammerspace" [1], and thrust it into the toilet between the pooping Sim's legs, and proceed to move it up and down vigorously by its wooden handle. The "Unnecessary Censorship" [2] strongly implied that the maid was performing a manual act of digital sex work. That little bug required quite a lot of SimAntics [3] programming to fix!

[1] Hammerspace: https://tvtropes.org/pmwiki/pmwiki.php/Main/Hammerspace

[2] Unnecessary Censorship: https://www.youtube.com/watch?v=6axflEqZbWU

[3] SimAntics: https://news.ycombinator.com/item?id=22987435 and https://simstek.fandom.com/wiki/SimAntics