It's a fancy term, but really all it means is that there is more to sexual response than the physiological arousal/climax cycle. The "more" in this case is what goes on between our ears. You've no doubt heard it said that "our biggest sex organ is our brain" - this is quite literally true. What we think about sex, even from moment to moment, has a huge impact on how we respond. Picture the following scenario:
You're in a dark room, lying naked on a bed. You become aware that someone is doing something nice for you - stimulating you in the way you like. Giving head, whatever. You're really getting into it, when suddenly the lights come on, and you realize the person is the same sex as you. What happens next? Of course, what happens next is not as predictable is we might suppose, but for the sake of argument, we'll say that what happens next is totally predictable, because you assumed it was someone of the opposite gender...