For many onsens, this rule died in the last five years of the tourism boom. Also, many young Japanese people in big cities now have tatoos. As along as your tats don't look "too Yakuza", you will be fine. Also, many conservative ones have changed to allow you to wear a small elastic band of material to cover them. Also, many onsens have the option of a private bath that you can rent for an extra fee. Even the conservative ones don't care if you have big tatoos in a private onsen.