Back in the day when I was but a young gay pup (no, not that kind of pup), it would be a question of picking up on countless little clues - this phenomenon getting labelled “gaydar” - if things weren’t already pretty clear, meaning if someone was “out” and had no issues letting it be known they were gay.
These subtle tell-tale signs would be nothing terribly overt and one could likely not even notice that you were getting those various clues. Of course, the sign receiver would have to have enough experience themselves to know what these subtle hints even meant first. You’d just get the “notion” that this person might be gay. If asked why, you may well not be able to put your finger on “the” reason, just an overall hunch. This would have been vastly more effective if you were hanging around other gay people to sort of learn these hints, stock up your “gaydar” vocabulary, so to speak; if you lived in the ‘burbs and no one knew anyone actually out and gay, you’d have almost no reference point to build your vocabulary on.
This, naturally, also had a lot to do with the fact you’d be meeting pretty much 100% of people face to face.
Let’s fast forward a few decades…
Today, there’s a whole lot more digital communication happening on phones and such, so the opportunity to catch subtle actions & responses, body language and other super subtle details is severely restricted. You may even meet someone “live” but then spend a fair bit of your interaction time with them sending texts and emails.
Likewise, you may “meet” people strictly online, even if not on gay apps, so just “average people” you get to talking to who you will probably not get any clues from in regard to their being LGBT or not, if the topic doesn’t specifically come up.
Based on that. I’d suggest that perhaps gaydar is a thing that used to be exercised and put into play regularly but that it’s likely to be used and refined a lot less now-a-days so that someone’s gaydar may be unpracticed and not too finely set up, missing a lot of the more subtle cues when one does meet face-to-face.
All that said, I would not say that gaydar was particularly accurate a vast amount of the time, even “back then”. But it would perhaps give you enough suggestions that you could start cautiously expressing your gay self with that person a little more confidently, with the possibility of having that reciprocated a bit higher than just dumb luck. Unless, of course, you’re just out and comfortably gay anyway and it’s then up to the potential other gay person to respond to that clear info.
So to the actual question “Gaydar: Fact or Fiction?” I’d say it’s potentially possible it's a favt. But it’s not innate and it’s not foolproof. A certain amount of “wishing” is also inserted into the equation which might skew the accuracy of the results.