The suggestive sequence supposedly represents the deep rivalry that women feel towards each other.
Bayonetta is a pretty unique game, as anyone who's been exposed to it for more than a few seconds will agree. What's more, underneath the veneer of pole-dancing witches and gun-shoes, beats the heart of a deeply metaphorical work - or at least, that's what creator Hideki Kamiya says.
Kamiya said that his favorite part of Bayonetta is when the titular character meets Joy, her angelic doppleganger. The pair square off against each other in a pose battle, which is a little bit like a dance fight, but a lot more risqué. As you can see in the video - which isn't especially work safe - Bayonetta eventually wins the contest, forcing Joy to drop her disguise and show her true form.
On the surface, the scene is just another part of an already overtly sexual game, but according to Kamiya, it also represents the rivalry that all women feel towards one another. He said that every woman regards every other woman as an enemy, and that's the idea that he was trying to convey. Even women who pass each other on the street will check out how the other looks, he said, with antagonism possible in even those brief meetings. "Women are scary," he added.
I'm not especially qualified to start talking about how women think, but I'm not entirely sure that Kamiya is either. Still, it would be fascinating to find out what messages and metaphors the rest of the game holds, buried deep beneath the partial nudity and lollipops.