The tl;dr version is that by the 80's the GDR was becoming aware that the marginalized status of queer people made them vulnerable targets for blackmail and exploitation by Western powers in what they termed the "political misuse of homosexuals". A kind of goofy phrase, but it does capture the nature of the situation, as the legal and social status of queerness in the GDR meant that Western agents could force queer people to become informants or assets under the threat of forcibly outing them and ruining their lives (something that the West does everywhere I would imagine, the most salient example currently being how Zionists do this to Palestinians). The SED ordered the Stasi to develop a solution and they ended up proposing several. Many of them being the usual ramping up of surveillance (as at the time queer people were ironically organizing alongside the church), but one suggestion was to "find resolution[s] to homosexuals’ humanitarian problems." And so they literally just did that, almost over night. They launched massive education campaigns, opened up state-run queer clubs in major cities, allowed personals for queer people to be run in newspapers, legalized queer marriage, allowed state-funded gender transitions, allowed queer people to adopt. This all happened around 1985 or so, which meant that for a brief period the GDR was (legally) the most progressive place in the world on queer issues. Culture obviously lags behind considerably, so it was no paradise, but there was a significant effort by the government to combat that with education about queerness for the wider public. Unfortunately, pretty much all of this was swept away when the GDR was basically annexed by the FRG, and modern Germany still, almost 40 years later, has not come close to what the GDR offered to queer people.

The author is a bit of a lib, but here's some further reading if you're interested: https://www.bostonreview.net/articles/gay-liberation-behind-iron-curtain/