The Knothole Skirt is obtained from the Box of Secrets on Knothole Island. To gain access to Knothole Island, you must have the Knothole Island DLC. The hint on the package says: "A Sexy Garment". This is possibly said because of how short the skirt is.
The skirt has the same model as the Pauper Skirt, only this skirt has a Lionhead logo printed on the front. The default colours on this skirt are black and red. The Knothole Skirt increases attractiveness, where the Pauper Skirt decreases attractiveness.