In early comedies of the teens and twenties, the possibility of homo behavior was a common joke. In "The Florida Enchantment", two women dance off together, leaving their bewildered menfolk to shrug, and dance off together themselves.
A popular gag in parodies of the western was to insert a flamboyantly effeminate pansy into the world of the macho cowboy ("Wanderer of the West", "The Soilers").
As film historian Richard Dyer demonstrates, describing a scene in which a burly stagehand taunts Charlie Chaplin for supposedly kissing a boy in "Behind the Screen".
The equation of male homosexuality with effeminacy was already "so firmly in place that a popular mainstream film could assume that the audience would know what that swishy [behavior] was all about."
Enter the Sissy -- Hollywood's first gay stock character.
The Sissy made everyone feel more manly or more womanly by occupying the space in between. He didn't seemed to have a sexuality, so Hollywood allowed him to thrive.
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