It's not even remotely true, it is one of those things that keep getting repeated without having factual basis of any sort.

In the Middle Ages, baths were used not only to wash the body and for beauty's sake, but also for health reasons (medicinal and healing baths). In the medieval medical treatises, bathing with a certain regularitity is recommended, both in public bathhouses and at home (for people who could afford it, obviously). Bear in mind that bathhouses are not only places for hygiene, but also for socialisation, where you could chat, drink, eat, gamble, etc. You could find bathhouses in a certain abundance in cities or towns, and they were regulated, as it is attested in plenty of municipal charters.

Of course, there was also bathing as a leisurely activity, same as today: people would enjoy bathing in rivers or lakes, play there, swim, whatever.

Bathing would not be a daily activity, but there were hygienic standards, as people have never liked feeling filthy. On a daily basis, people washed their hands, faces, armpits, legs, and pudenda, as those parts tend to get dirtier. For that, people would use lye made from ashes, or soap, some water, and a cloth.

As for bathhouses, there is marked decline in its presence during the 15th century, for a variety of reasons. They were places of socialisation and business, which combined with the usual nudity customary to the activity of bathing, you can imagine that a number of them also functioned as brothels. It was also a time of epidemics, so, as places of social contact a number of them were closed on the basis of them being places of propagation of transmissible diseases.