The bully: You're gay.
The nerd: I am.
The bully: Yeah.
The nerd: Then what are you?
The bully: You're gay.
The nerd: I am.
The bully: Yeah.
The nerd: Then what are you?
Listen up, genius! You're so dense, light bends around you. The joke is that the nerd is turning the insult back on the bully. If the bully is pointing out that the nerd is gay, the nerd implies the bully must also be gay to even care or notice. It's like you trying to understand advanced physics – impossible!