Recently mega-atheist Christopher Hitchens commented in one of his anti-God rants that one of the worst things he could imagine was an all seeing and all knowing God. While he didn't go into detail about the specifics of the horror of what God would view, he sounded much like children I've spoken to when they first worry that God sees them when they go to the bathroom. So I thought I'd write a little response to the general concern about the "all seeing" God.
Obviously God knows everything that happens because not only is he the creator of all physical matter, but by imbuing physical matter with the ability to exist he is the underlying infrastructure of the universe. So everything down to the atomic level and below are known to God because it all exists and moves within him. The traditional musings of "how many angels could dance on the head of a pin" reflects awareness that God exists on a scale that is minutely small and immensely large, in a time when people did not even know about subatomic particles. What sounded like a silly question was actually profound, because armchair philosophers and preachers of those days recognized both the immensity of God, but also God's existence, will, control, and awareness in even the smallest corners of existence.
God has "seen it all" in every species of life since, of course, he created it all. He's seen humans and animals do everything imaginable. Worse, for God, he can tell when people are on a trend line to doing something harmful and hateful, so he is not surprised by or unaware of anything. Having said that, though, humans are in no safer privacy hands than God. God does not have an agenda in "seeing all." He sees all because he is everywhere there is life and existence, by virtue of who he is and what he created. Humans have agenda when they "peep" on people; God does not. God is not turning his attention toward a person who is doing something private. You know how when you have to change your clothes in the room with someone else, and the person turns away, but they know you are changing your clothes? It is like that with God. If you are in the bathroom it's not like God is paying attention to you at that moment. Unlike people who put cameras in bathrooms, as either a "safety" measure or to "peep," God does neither. If anything, God's gentle presence can be there if needed. Having tended to sick and elderly who have "bathroom" problems, if God is needed to comfort them, there is no problem in considering how God's "all seeing" ability can be called upon by the ill person to help with their physical affliction. Jesus touched lepers, so there is nothing new there, and nothing to be embarrassed about.
But be assured that if someone is in the bathroom and uses that opportunity to think depraved and unkind thoughts about another person, however, that is calling attention to oneself from the unseen but all seeing God. If in the course of being in the bathroom a person does something depraved with what should be a normal process, for sure God knows of it, for in sinning, one is calling attention to oneself. For example, the mean landlord who thinks they are hurting a tenant by not fixing their bathroom plumbing, and thinks ha, ha, their toilet does not flush, how do they like that... the person in the bathroom does not need to worry about being "watched by the all seeing God" but you better be sure the evil landlord does need to worry, for God sees the intentional suffering and affliction of the tenant. All of these incidents, whether you recall them or not, will be recalled by God at the time of one's death and personal judgement.
In another example, suppose someone engages in sacrilegious activity, such as exposing a holy item to dirt (and you know what I mean by this.) God knows about it but is not "hurt" by it. So anyone who thinks they are venting rage at God that way is wrong; God is aware but untouched personally. However, God will respond with the harshest of judgment when it is that person's time because sacrilegious activity is never a solo act with no consequences. Somewhere there are children being used, people being exploited, God's word and will being suppressed, and hence innocent people being harmed, in the scenery and backdrop of an individual sacrilegious activity. It is for that reason that it will be most severely punished.
Heaven is never empty and it is not asleep. When the Prophet (peace be unto him) was on earth, Allah was still in heaven. When Jesus was on earth, even as Son of God, God was still in heaven. It's not like while Jesus walked that the rest of the world could run around and do whatever they felt like and God did not know because he was "busy being Jesus." There is not a single subatomic particle that blinks in and out of time and space that God does not know about.
When one is sinning, God knows and is grieved on your behalf, but he is not taking time out just to spy on you or attend to you. God grieves all sin because it is by its nature part of his beloved family harming themselves and harming others. But that does not mean that he is looking over your shoulder when you are engaged in that sin. He knows of it because he is omnipresent, but he is not attending to it in a special way, so you don't need to feel spied upon. But if that sin is a matter for judgement, you can be sure it will be brought to your attention at the time of judgement. That is why true and sincere sacramental Penance (Reconciliation, also called Confession) and Holy Eucharist as practiced by Catholics is such a grace bestowed by Jesus, because it is the cleansing and forgiveness of sin, as the priest adjuncts with Jesus to bestow that forgiveness and erasing. It's the one place that you can get a "guarantee" that a particular sin has been confessed and atoned for. In Confession one is acknowledging that God does know all that you are doing, and you express your repentance for a particular sin that you know you did and you know he knows about. This is why cynical confession does not work, because just as God knows about the original incidence of sin, he will know your thoughts that you plan to sin again and just want to "touch base" and see if you can get away with a Confession to tide you over between sins. Those sins are not forgiven and so must be accounted for at judgement, the same way people who aren't Catholic account for their sins when they die.
In general, though, the foibles of humans is understood and tenderly known both by God and by your guardian angel. God knows when a student goes partying, pukes from drinking too much, and falls into bed with the wrong person. Trust me, God's not taking time out from the universe just to pay attention to this event. God knows about it though, as does your guardian angel, because at some point in your life, that event will be of importance, where you might need comfort and support, and improvement of impulse control, or if it becomes a pattern of sin that harms yourself and others and threatens one's very soul in the long run. God is far too wise to zero in on trashy embarrassing human behavior and pay any particular note of it, except in the overall pattern of how your life path is progressing, and if your soul needs saving. I guess you can think about it as God keeps the ultimate "baby scrap book" for each and every person throughout their life, and periodically points to a page, or a picture, to try to guide the steps back to the straight and righteous way. But God really does not care about picking noses, having bathroom visits, how you look naked, whether you wear a batman mask to bed, and so forth, unless these are things you are doing to harm yourself and others through sin. Natural bodily functions are nothing to be ashamed of, despite the media's every effort to make them so. I mean, even the movie Jurassic Park had to have a snot joke. Goodness. But anything that is harmful to a person (think child abuse), remember, there is a total accounting that will be due, for God misses nothing.
So take that magazine in the bathroom and do what is natural, and so long as it's not a sin, trust me, God's changed bigger diapers throughout eternity than yours.