Stark Reality is a spell given by Sanguine, the Daedric Prince of debauchery. It is only usable at the countess of Leyawiin's dinner party; it makes all of the guests immediately lose their clothing and begin to run around. It also removes the Hero's gear, which is returned at the end of Sanguine's quest.
Note that using this spell will incur a bounty on the Hero due to the spell's Drain Health effect, thus counting its use on NPCs as an assault.