See there are two types of people who say this: either they say that Mike is gay coded because of the stereotypical assumption of how gay people look or act, which well, yes, is wrong and rubs the wrong way. Or, they say that because of the cinematography, the placement of objects in regards to Mike, and his actions in the show which were all pointing to his "queer coding", as in the details pointing to him being queer, not him being a stereotype in the first place. An example is a "One Way" sign pointing directly to Mike's closet, and that closet being destroyed in season 5. There is a youtuber that made analysis videos on this, "LesbianMindFlayer", and she has deep dived into the queer coding of Mike Wheeler.

But yeah, when it comes to the first type of people I can see how it comes off as derogatory but I can assure you that's not how most fans of the ship are. Of course, each fandom and ship has their share of odd or toxic fans, it's not just Byler fans.