Time4Tea: What if a certain amount of 'puritanism' was part of the fictional setting? Again, FR is supposed to be a medieval fantasy setting - does it necessarily have to conform to modern-day PC values? The medieval European culture that much of the setting portrays was likely quite puritanical and conservative in nature (much more so than the modern day).
Sabin_Stargem: ...Have you even played BG2? There are plenty of brothels, and the Underdark demonstrates a matriarchal society, that engages in coercive sex. Faerun has plenty of hybrid critters, such as the Bhallspawn rabbits, the dragonblood folks, and so on. The religions are essentially polytheistic, as deities clearly exist in the setting. Magic is a thing. There is a lot here that clearly isn't European in the least.
Further, your "medieval" norms are invalid from a historical standpoint. The cultures around the Mediterranean basin were rather diverse, so I am not even sure what you mean by "medieval". Italy? Spain? Venice? The Moors?
Medieval is a time period, not a place. But you make a good point: the Drow, for example, have always been portrayed as amoral and hedonistic, so some level of 'sexual deviancy' on their part would fit the FR setting fine. However, the human population around the Sword Coast have always been portrayed as medieval European (in particular Central/Western), so I have an expectation that their culture should somewhat mirror what would be expected from that medieval European culture. If people are walking around town wearing their genitals like a badge, that wouldn't be internally consistent.
This leads to another point I'd like to make: if the developers wanted to make a fantasy setting where sexual identity is a prominent theme, that's fine - go right ahead. But, why the need to modify the Sword Coast region of Faerun (which has been extensively developed through dozens of full-length novels)? In my opinion, it would have been a much better decision to set the game in a different, less-developed region of Faerun (e.g. the South-East). Perhaps the culture there is different and sexuality/gender is a bigger issue?
That I would have been able to get behind. Everyone gets what they want: you get your modern, progressive setting, where sex is bigger theme, whilst the established setting I've been following for 30 years, that portrays a more conservative human culture gets preserved. I mean, there used to be many different D&D settings to choose from, each with their own flavor. And good god, do we need to see more D&D CRPGs that aren't set in the Sword Coast ...
People talk about "You have a choice, you can just ignore it." No. Re-imagining/modifying an existing fictional setting that I like isn't giving me a choice, that represents another group trying to impose their vision on me. Giving me choice would be to create a new setting for a sexuality-oriented RPG, then letting me choose between that new setting or the older one.
I am liberal/progressive leaning and I am all for creating something new and different, but I also believe that well-established fictional IPs should be to some extent preserved in the way their original creators intended. If you want something new and different then
go and make something new. Or, has the current generation lost the ability to be creative and create new content? Is it all they can do to 're-imagine' existing IPs, in an erosive and derivative way?