I see your confusion, but I never actually agreed that the way people approached it in the past was ridiculous. Nearly every single human custom is arbitrary and subjective, but there's no reason to abandon all preferences simply because we understand that.

"Modesty" in my country means that behaviors and body parts that are considered sexual are not displayed prominently or advertised; it doesn't matter that a nipple may not be inherently sexual, because everyone here feels that it is, and thus not displaying (and by extension, not saturating TV, movies, and advertisements with images of sexualized breasts) would be considered modest.

I certainly wouldn't mind if the nipple was eventually de-sexualized, but seeing as that's likely not possible given the internet, and since it will likely remain sexualized at least in the western world, I'd prefer if people were modest about it.