Why is it that denuding something means you strip it rather than dress it?

Prefixes can have multiple uses. In the case of denude:

Origin:

late Middle English: from Latin denudare, from de- 'completely' + nudare 'to bare' (from nudus 'naked')


Because sometimes Latin’s de- prefix meant something else than to strip something away or to undo or reverse the action of a verb. And so it also has come down to us as something else in English.

You were thinking of OED sense 6, so here are the OED’s senses 3–5 for de- to illustrate just a few of the other possibilities for that prefix:

3. Down to the bottom, completely; hence thoroughly on and on, away; also methodically, formally:

  • as dēclāmāre to shout away, declaim;
  • dēclārāre to make quite clear, declare;
  • dēnūdāre to strip quite bare, denude;
  • dēplōrāre to weep as lost, deplore;
  • dērelinquĕre to abandon completely, derelict;
  • dēspoliāre to spoil utterly, despoil.

b. To exhaustion, to the dregs:

  • as dēcoquĕre to boil down or away, decoct;
  • dēliquēscĕre to melt away, deliquesce.

4. In a bad sense, so as to put down or subject to some indignity:

  • as dēcipĕre to take in, deceive;
  • dēlūdĕre to make game of, delude;
  • dērīdēre to laugh to scorn, deride;
  • dētestārī to abominate, detest.

5. In late L., dēcompositus was used by the grammarians in the sense ‘formed or derived from a compound (word)’, passing later into that of ‘compounded over again, doubly or further compounded’; in this sense the word has in modern times been taken into chemistry, botany, etc. (see decomposite, decompound), and the prefix has been similarly used in other words, as decomplex, demixture.

There actually is a word that is constructed and means what you seem to be expecting of denude, and that is debare. Again per the OED:

trans. To strip down, make quite bare.

Hence † deˈbared ppl. a. So † deˈbare a., intensive of bare a.

  • 1567 Drant Horace’s Arte of Poetrie A ij, ― As wooddes are made debayre of leaues by turnyng of the yeare.
  • C. 1620 T. Robinson M. Magd. 223 ― Next her debared brests bewitch mine eyes.

As you see, it hasn’t been used much for quite some time. The OED labels it obsolete. Best stick with denude.