When I lived in NL, it was explained to me that closing the curtains would imply, in some sort of weird Calvinistic belief, that the occupants were engaged in some nefarious activities; therefore the curtains are left open to show that the occupants have nothing to hide and are engaged only in wholesome activities.

The other side of the social contract obliges passers-by to not look inside.

The other strange thing that I found is that some apartments have little spy mirrors mounted on the exterior wall to allow the occupants to monitor what's going on in the street.

> the occupants were engaged in some nefarious activities; therefore the curtains are left open to show that the occupants have nothing to hide and are engaged only in wholesome activities.

That sounds utterly dystopian. Whose business is it if we want to shag in the morning?

It’s also completely self-defeating. Nobody can prove that they never did anything that someone else would disapprove. There are solid reasons behind the "innocent until proven guilty" principle.