"why is their sexuality an issue?"
Apparently they are the ones making it an issue. Don't ask, don't tell. What's wrong with that?
The main problem with this policy is that it has become a big copout for some people who want the benefits of military service but who are not willing to pay the price. For example, someone can attend the service academies for free, but then weasel out of the military service required by claiming to be homosexual.
Secondly, there are already closeted gays and lesbians who serve our country honorably. These people, if they are ever found out by someone with hostile intent, would face a dishonorable discharge for no good reason. That's the same sort of fate someone who deserts would face. To me, that's disgraceful.