(Iro no shiroi wa shichinan kakusu; “White skin hides many flaws.”)
There’s all sorts of baggage here! This kotowaza is literally saying that if a woman’s skin is sufficiently pale, then that alone makes her so beautiful that even a variety of physical flaws can’t detract from her looks. I believe that this comes from the value ascribed to a secluded, indoors aristocratic lifestyle rather than imported European norms, but it’s still kind of iffy by today’s standards.
We begin at the end with the verb 隠す (kakusu), “to conceal [something],” in conclusive form. Although the expected object-marker particle is elided, this verb takes as its object the number-noun 七難 (shichinan), “seven difficulties” – that is, “a variety of faults.” It turns out that this mini-sentence is itself a comment on a topic marked by the particle は (wa). The topic itself is a noun phrase centered on the noun 色 (iro), “color,” linked by the associative particle の (no) to adjective 白い (shiroi), which appears in… conclusive form?
This one is a little odd. The most likely explanation is that the adjective is actually in prenominal form, and what it modifies is an elided こと (koto), “[abstract] thing.” So 色の白い essentially becomes “whiteness.”
Keep in mind that for some other phrases, 難 becomes shorthand for more severe problems, including natural disasters, so the saying does not assert that white skin can cover for natural disasters or the like… somewhat ironically, in retrospect and from half a world away.
One variant saying replaces whiteness of skin with length of hair (髪の長い, kami no nagai) as the positive quality that drowns out lesser flaws. Another related saying doubles down on the color: 米の飯と女は白いほど良い (kome no meshi to onna wa shiroi hodo yoi), “cooked rice and women are as good as they are white” – apparently a saying from before people realized that a white-rice diet leads to thiamin deficiency.
(“Iro no shiroi wa shichinan kakusu to iu keredomo, kono musume ga shaberi hajimeru to kakusu koto no dekinai seikaku no warusa ga arawa ni naru.”)
[“It’s said that white skin conceals a multitude of flaws, but when this girl starts talking it reveals a flaw in her character that can’t be hidden.”]