You may be interested in a previous answer of mine to the question of How was homosexuality generally viewed by native Americans, pre-colonization until American revolution? which deals with Aztec Mesoamerica's homosexuality and general queerness (since modern Western concepts on this topic do not always translate historically or cross-culturally). Since it's a fairly lengthy response, so I won't copy the whole thing here. I'll simply point out here that we have documentary evidence of men who would generally fill the role of what we would consider "gay," but also contain elements that we might associate with being transgender in that at least some of these men would dress and perform women-coded acts like spinning and weaving, while having a "woman's heart." Suffice to say that Nahua gender roles were complex and nuanced.

The Spanish, of course, were not interested in an ethnographic examination of emic views on gender and sexuality. They bobbed up to the Totonac coast and saw men (and specifically adolescent men/boys in the Totonac area) dressed like women and having sexual relations with men. They were not interested in the metaphorical or theosophical nuances of Nahua xochihuah and their seductive ways. Neither were they interested in the sociological implications of men living as women who were kept by lords, according to the Codex Tudela, "for their vices."

Instead, the Conquistadors were happy to label this all as sodomy, which also gave them a convenient excuse for their violent actions. Much of the official language regarding the Conquest of Mexico is suffused with justifications for seizing power, waging war, and harshly punishing enemies that are based in Christian doctrine, particularly in extirpating sinfulness, such as sodomy.

By sodomy the Spanish definitely meant sexual relations between men. Diaz del Castillo, in listing the various vices of the peoples of Mesoamerica gives us a tantalizing view of the prevalence of homosexual relations when he writes that "nearly all of [the natives] were sodomites," though he clarifies that it was more common among "especially those who live on coast and hot country, to such an extent that boys go about clothed in the dress of women to [a livelihood] in that diabolical and abominable employment" (p. 263)^* . Other vices he laments, but does not call sodomy, include human sacrifice, circumcision, cannibalism, incest, cannibalism, and drunkenness, the latter of which he particularly called out the people of Panuco for their practice of alcoholic enemas.

Sigal (2007) notes that the actual acts which constituted sodomy could be, and were, defined inconsistently, but also agrees the term was focused on sexual relations between men. Cross-dressing, for instance, is associated with "sodomites" but this is in the context of these same individuals also having intimate relations with other men. Tortorici's (2018) Sins against Nature: Sex and Archives in Colonial New Spain emphasizes that, no matter what the colloquial understanding of sodomy was at the time, there was a developing corpus of religious and secular law on the topic. Falling under the broader rubric of acts "against nature" alongside bestiality and masturbation, sodomy prosecutions hinged on the act of two men acting "as if they were man and woman." Anal penetration was the gold-standard for sodomy (there's a sentence I never thought I would write), but other behaviors such as fellatio, mutual masturbation, and genital rubbing/fondling were also recognized as sinful. While evidence of these behaviors might be used to help prosecute an unwitnessed claim of anal sex, Totorici makes it clear that as sodomy trials became more legalistic (and medicalized) these acts were seen as distinct from "sodomy" and punished less severely.

Again though, the early Spanish like Diaz del Castillo were not legal or religious scholars. Though many certainly held sincere Christian beliefs and a desire to spread their religion, profit was the primary motivation for those who accompanied Cortes. I have no doubt that Diaz del Castillo was expressing genuine revulsion at homosexual practices, and writes approvingly of native rulers giving lip service to banning it. We should not assume, however, that conquistador laments about "sodomy" necessarily meant they were directly witnessing male-male anal sex, and unsurprisingly our direct accounts of homosexual acts in pre-Hispanic Mesoamerica is scarce, to say the least. Rather, Diaz del Castillo and others were seeing men who were, to their standards, gender non-comforming and thus fell into a colloquial definition of "sodomites" with all the connotations that term implied.

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^(* Quotation is from Volume 5 of Maudsley's unabridged translation of Genaro Garcia's edition of Diaz del Castillo's work, published by the Hakluyt Society in 1916.)