Nearby settlement hides last of revealing lingerie (9)
I believe the answer is:
nightgown
'lingerie' is the definition.
(nightgown is a kind of lingerie)
'nearby settlement hides last of revealing' is the wordplay.
'nearby' becomes 'nigh' (I've seen this before).
'settlement' becomes 'town'.
'hides' means one lot of letters goes inside another.
'last of' indicates one should take the final letters.
The last letter of 'revealing' is 'g'.
'town' placed around 'g' is 'tgown'.
'nigh'+'tgown'='NIGHTGOWN'
(Other definitions for nightgown that I've seen before include "Dress for bed?" , "Sleeping garment" , "Garment worn in bed" , "Clothing" , "Bedtime attire" .)