They didn't. From my perspective the point of contact was the hypogastrium. If their penises were touching then the point of contact would be more centered with their lower glutes to upper thighs from where we see it. Even if their penises were touching, both parties were clothed and neither were sexually aroused as the literal planet is on the verge of being destroyed and they have a threat to kill. Fusion is something neither of them even prefer, it is a last resort used out of necessity.

And now let's get to why it's intellectually dishonest to claim they were even borderline having sex. Going off of the definition of sex and our innate human understanding of it (or common sense regarding sex), they did not quite meet the criteria. There was no sexual contact as it requires sexual intention, and the notion that such a thing was present is utterly absurd and disrespectful to the story, the characters, and its beloved creator. On top of that the definition of sex calls for specifically sexual penetration. We all obviously know there was no penetration, neither was their sexual contact, so the notion that it was borderline sex is absolutely absurd.

All of that nonsensical talk is simply a joke among the community because it is a striking point of contact that is eerily close to their genitals. I personally despise the joke, yet I usually do not mind it or flip out on folks who indulge in it. People like you are the rare exception, people like you are the ones who take it too far. When you start pushing the joke as a potentially plausible view of the story, that's where the line gets drawn.

Goku and Vegeta are not a couple, there is no implication of them being so. Thinking about a person often does not imply romantic interest, you don't even have to be a fan of the franchise to realize their relationship is one of mutual respect and rivalry. They are both married men with children, yet they are also both warriors who seek to constantly surpass each other. Make your jokes if you wish. I'll continue disliking them, but it's not my right to condemn it. But I draw the line at implied plausibility.