AlexSLR
I think they are referring to the fact that the terms "Shemale", "Gay", "Tranny", and "Transgender" can appear under the "Niche" search category when the inputted search terms do not match a particular tag. Its almost like they've been included as the default/always-there option for Niche search results.
I can confirm that the issue exists on Quest 3 with DeoVR 14.3.2592.
It doesn't appear to be an issue in the Hub.
The terms they are referring to do not all have associated tags that can be filtered the way you pointed out. Searching for "gay" or"trans", for example, would not take you to a tag/category page with the option to Hide--instead, it takes you to the segregated Gay/Transgender areas of SLR (with no Hide option to be selected).