Has anyone else encountered an issue where, upon zooming out, a line of skin appears on a Sim's pants or hair? For example, a hair appears fine up close, but from a distance, there's a noticeable 'bald spot' on their head. How do you fix this problem? This only happens with some CC.

Can you post a picture of this happening?

For hairs and other CC with alpha-editable meshes, it could be an issue with the mesh group layering. If it's layered wrong, you can get some patches showing a "glowing" line from the alpha.

I got that on some pants once. Unfortunately, I can't remember if I managed to fix it.

Here it is. This is the best I can do.

The image on the left is the glitchy one (spots circled). It's hard to see it, but a little bit of his skin is showing through his pants. It's a peach line on the leg. The female sim has a little bald spot on her head in the same photo.

The right photo is them zoomed in, which they look okay (no issues).

I think you might want to turn anti-aliasing on? It's hard to see from a photo of the screen, though. A screenshot would be clearer - you can use Windows snipping tool, printscreen on your keyboard pasted into MS Paint, or a free third party screenshot program like Fraps or Gadwin Printscreen.

Also, try to have him stand against a contrasting background, like the grass rather than the path

Antialiassing (smooth edges ingame) looks like the thing you want to turn on, yes.
You may also want to check out the other graphic settings.

"Sim/object detail" and "Texture detail" on high can help if you're having issues with meshes or textures showing up wrong (especially CC meshes/textures).

The hair issue could be what I said earlier. Not sure about the pants - it's very difficult to see anything in the first picture.