When you're in the buff, you're completely naked. Most people are in the buff when they take a shower.
In the buff is a way to say "not wearing any clothes," especially informally: "The toddler ran around the house in the buff, refusing to put his pants on." It comes from buff, which originally meant "buffalo or oxhide," and the term buff-coat, or leather tunic — before the seventeenth century, to be in the buff meant you were wearing such a coat. Later, the similarity of skin to the color of the leather changed the phrase's meaning to "naked."