he really meant gay, I like that the Kinks had this nice song about a gay man in the 60s.
They're likely more popular today for having had a trans positive song from back then, which some people say it's another "homoerotic" song because it's implied they don't think Lola is a woman. Those people are wrong. I get not enjoying Lola because some may see it as objectifying but I genuinely love that one too, Lola is great.