You could argue all day about the finer points. For example, up until recently, there simply was no mainstream canon which included gay characters. Now there is. Whether the term ‘slash’ should be applied to fics about characters defined as gay in canon is debatable. One might also argue about whether slash means the story is mainly about the relationship, or only includes such a pairing. My opinion is that slash includes any story in which a gay pairing (with at least one of the pair consciously desiring the other) is important to the plot. Others will disagree.
On the other hand - over half of slash is not explicit, a surprising amount is rated G or PG. Many readers say they prefer not to see explicit sex. This may be a personal preference, or it may be an opinion that the ‘milder’ type of slash tends to be better written, and more about the romantic side of the relationship. Whether that’s true - I can’t say. I’ve seen explicit slash that was beautifully written, had wonderful plotting, great characterization, and truly moving romance. Much of it does not. Of course, much of the non-explicit slash does not either.
So - my advice is; if you’re comfortable writing explicit sex, go ahead and do it. If you need a little guidance on realism, visit Minotaur’s Sex Tips for Slash Writers (this site is absolutely NC-17 rated and contains explicit pictures and text, including some stuff that's not for the weak of stomach, so be warned.) But if you’d rather cut away before the hot and heavy action, by all means go that way. It probably won’t detract from your story, and in fact sex scenes are surprisingly hard to write and can be a weakness in an otherwise fine story.
What can sex scenes add? Beside the obvious titillation for the reader? They can illustrate the nature of the relationship, how these people act and treat each other in a very intimate situation, often revealing something about their personalities. Men tend to express affection more easily in physical ways than verbal, so sex may the only way at least one of your characters can show his deepest feelings. And the sex doesn’t have to be explicit in order to bring this out, you can make your point during the kissing and touching, and then leave them to themselves.
One more caution about sex scenes - in my opinion, they should not be gratuitous, in least not in a story with a plot. Use them to make a point, to show something new about the characters, to show an interaction that adds something to the story or the character development, not just because you think it’s time for some sex. Remember also, too many sex scenes may start to look alike if they’re not there for a purpose, and may end up being boring. PWP’s are something else, they’re all about sex, and that’s fine in that context.
Don’t be too eager to get to that first sex scene, too, in a ‘first time’ or getting-together fic. It’s not going to mean much if it’s too quick and easy, if the reader doesn’t care about the characters, or understand why they love or at least want each other. Ideally, you should have the reader panting to see those characters make that first move, share that first kiss, and finally wind up in bed (or on floor, or desk, or whatever). This takes time and effort to build up to, it’s just not going to happen in a few paragraphs or a few short chapters.
By the way, almost everything I’ve said here applies equally to fics about heterosexual relationships.
How realistic a slash story should be is actually a tough question. One of the most common complaints I see about slash is that it’s unrealistic. This means the type of fic in which everyone, including the guys being slashed, seem to either not notice that a homosexual relationship is involved here, or accept it without a second thought. I can see the appeal in this, it makes for a story that can concentrate on romance, free from the troubling, often very upsetting problems that would be involved in real life. Personally, (and this is just my personal preference talking) it bothers me, with the way it ignores the real problems faced by gay people, and the way it's often just so unbelievable. (This is in stories taking place in modern society, of course, none of this applies to fics set in ancient Greece or outer space or the far future. It would be equally unrealistic to show Hercules getting all angsty about wanting to have sex with Iolaus.)
There's certainly a place for slash that's lighter in tone, and certainly an audience. It can be done well, without being extremely unrealistic. One possibility is to assume your characters have already accepted being gay or bisexual (but say so in the story). If the character is facing a same-sex involvement for the first time, you could show them taking it in stride, but keep it consistent with their personality and don't just ignore the fact that they will have feelings about it. Also avoid showing them revealing their relationship to everyone in sight and having it cheerfully and immediately accepted. (This will depend on what the other people in the story are like.) Try to avoid the common cliché of the friend or mentor who sees that they love each other when they can't see it themselves and gets them together.
A lot of how well any story goes over depends on the writing. When done well and convincingly, lighter, romantic slash can be good fun. When done badly, it's just ridiculous.
Characterization: Probably the most consistent complaint I’ve come across on the web about slash is that the characterization is terrible. Big, strong, insensitive, macho male characters are often portrayed as bursting into tears at the slightest excuse, needing constant reassurance from their beloved, and being prone to cuddling, giggling, pouting, cutesy pet names, and frequent lengthy declarations of their overwhelming love for whoever their slash partner is. This is referred to as feminization of male characters, but it’s really a gross exaggeration of stereotypically feminine qualities.
Just because a guy’s gay doesn’t mean he’s not still a man. Gay men are a little more likely to be emotionally open and affectionate, but they’re still men, still trained from birth to be unemotional, undemonstrative, and - well - guys. (Men aren't all alike, of course, so this is a generalization.) This is not to say men never talk about their feelings or say, “I love you.” They do. But most of them don’t make a habit of it. If your guy acts as described above in canon, then fine, keep him that way. Chances are he doesn't.
Part of this may be an inability to conceive of a love relationship without the traditional male/female roles, so one of the guys gets turned into the ‘woman’. I tend to think something else is going on here, since no woman I know acts like that. This is obviously not good characterization, or good understanding of how gay relationships work, or even a realistic understanding of heterosexual relationships.
Another frequent problem with slash is the tendency to make it all about sex, the failure to show us why these two people are involved in the first place. You may be starting from a close canon friendship, which will make it easier, but you should still spend some time on convincing us that it’s more than a physical attraction. (Unless that’s all you want it to be!) Show us what they talk about, what they have in common, how they’re different, what they find so attractive in each other.
Self-realization: There’s many different ways for a gay person to acknowledge that he/she is homosexual. Some are aware of it from a very early age, and never have a doubt. Some don’t realize it, or don’t face it, until their teen years and often go through a struggle during which they make repeated efforts to be straight. Some repress it almost completely, get married, have children, and eventually find it impossible to deny their true nature, sometimes with tragic results. Remember, gay people grow up in the same society as everyone else, one that’s still very homophobic, one that assumes it’s natural and normal to be straight, undesirable if not sinful to act on or even have homosexual urges. I don’t think any gay person doesn’t go through some kind of trauma, greater or lesser, in accepting their homosexuality and its implications.
This applies to bisexuals too, by the way; it’s extremely difficult in our society to admit any serious attraction to the same sex. And also, having slept with the opposite sex or even having been married does not necessarily mean a gay person is bisexual. The most exclusively gay guys I’ve known were perfectly capable of being aroused by a woman.
It’s realistic to take this process into account to some degree when you set up a relationship. It is most emphatically not realistic to have your characters just shrug when they find themselves sexually attracted to a member of the same sex for the very first time, or worse, not even think about it. Just how far you want to go in the direction of realism and drama is of course up to you, it depends largely on what kind of a story you're writing; drama will get more into the painful problems, romance or humor will stay away from them. Fanfic, or any fiction, doesn't have to be completely realistic. At the same time, even lighter stories should have enough of a base of reality to be convincing.
Your characters may have accepted being gay or bi years ago. Fine, say it or show it. They may be only realizing or admitting it now. Show that, again how far you go depends on your story. Your character(s) may have been shown in canon being interested in the opposite sex to some degree. Don’t just ignore that, show that he/she is bisexual, or in denial, or covering up. In a more dramatic story, deal with the issues that may be raised by a rejected opposite-sex love interest.
On the other hand (there's always another hand!) you may end up going too far, showing your gay/bi characters being miserable and running into rampant homophobia at every turn. While this kind of thing does happen in real life and you may want to write a story dealing with these issues, keep in mind that most gay people do adjust quite well and have as happy lives as the rest of us, and that most people are not violently homophobic.
Bisexuality: This is a favorite way to explain an apparently straight character suddenly falling in love with a member of the same sex. It’s fine, as long as you deal with the issues (perhaps including the lack of acceptance bisexuals often face from gays as well as straights), and as long as you don’t do this every time. Just keep in mind that bisexuality in the form of being attracted to both sexes about equally is relatively rare, so it's unlikely that every character you write about will be bisexual.
But I’m not gay… This is another favorite device, the idea that one or both slash partners should not be defined in terms of straight or gay. It’s the beautiful but unrealistic concept that they share a bond that goes beyond physical bodies, that they are true soulmates, and their love transcends gender boundaries. I’ve actually read one fanfic that did this convincingly, believably, and quite touchingly. A few more did it well enough that I could suspend disbelief. Others had me saying, “What the …?” While a good enough writer can convince us of almost anything, this is really not the way the world works, and it’s not the way human beings work, again especially men. As a writer you’re free to do what you want, but be aware that this is not realistic.
Coming out: But suppose none of the above applies to your story; your couple is in an established relationship, and/or both of them have fully come to terms with his/her sexuality. Good. Now all you have to deal with is the reactions of the people around them.
Twenty-five percent of parents whose kids tell them they’re gay reject them in some way, often kicking them out of their homes and refusing to support them anymore. Twenty-five percent! Some of these kids wind up on the street because their parents can’t accept them the way they are. Most of the rest of parents go through a process of shock, denial, anger, guilt, and finally some degree of acceptance, ranging from welcoming the son or daughter's lover into the family to just not wanting to know about it. A very few accept it easily, usually because they’ve suspected it for some time. Now, how realistic is it to show parents calmly and quietly accepting their son’s announcement that he’s gay? Possible, yes, but unlikely.
And then there’s siblings, friends, co-workers, teammates, etc. Circumstances and the personalities of the characters involved will have a lot to do with this. Siblings and close friends are more likely than parents to be accepting. With co-workers, it depends. If you’re talking show business or the arts, maybe it’s not a problem. If your guys are police officers, they’ve probably got a tough road ahead. Chances are, at least someone’s going to have some sort of bad reaction, even if it's just hostile looks or gossip.
Keep in mind also that unless your characters are out, and strong or defiant (or foolish) enough not to care about other people’s reactions, they are unlikely to start sucking face in the middle of a crowded street or in a classroom at school or in the lunchroom at work.
Some think it’s because we women want to write about men who are a little more sensitive and open than the characters we see on TV or in the movies. Some think we identify with one of the male characters and vicariously have a romantic/sexual involvement with the other. Some think it’s because of the lack of good female characters in so many shows and movies, meaning men must be paired with men if we want to stick with canon characters.
What do I think? Very simple. I think a lot of straight women are turned on by the idea of two (or more) hot guys together, and being women, we want more than uninvolved sex; we want to see characters we know in a romantic relationship. This comes right out of the same quirk of human sexuality that motivates so many straight men to be turned on by lesbians. (Okay, fake lesbians - you could certainly say most slash is about fake gays, too.) Again, I find it rather liberating that so many women now are able to admit this attraction.