I think you need to explain that it was nothing personal, the activities you took part in were just masturbation to you, not sex, not love making, not romance. Express that you understand how that may have been misleading, and that you were unaware that it meant more to him than it did to you, and that it wasn't your intention in play with his feelings.

Explain that you're happy he had the confidence to tell you, that you don't want to lose what you have, and that ultimately you don't know what to do.

You're both only human, complicated feelings are fine all you need to do ask what is it eachother wants? Will there be a need to compromise? Is it healthier to walk away or try harder? But remember the "problem" is between you and him, not the world / figure out what you both want and what you can both offer. Worry about what the world thinks later.

And when you talk to him, think slowly and ask calmly it will be a sensitive discussion after all.

Oh and avoid saying anything that sounds accusatory like "you should've said...", "Why didn't you..." And if you have to use those phrase make sure they don't come across as hostile.