It should be noted that the vast majority of yaoi manga, doujinshi and fanfictions are written by women for other women (or girls, more often).

For the life of me, I can't see what they find so fascinationg about it, and I've had several discussions about it with yaoi fans.

Perhaps the best approach to explaining it was this: fantasizing about two gay males allows young girls to deal with their own developing sexuality, while at the same time allowing them to keep themselves detached from it. Fantasizing aobut themselves having sex would be too scary. Note how the genre is most popular in Japan, where women's sexuality is relatively repressed in general. Note also how all conventional yaoi couples consist of a distinctly male seme, while the uke shows very feminine features and behaviour (especially compared with the original, in the case of doujinshi), because (that's my theory) that makes it easier for the readers to identify with him, while his formal maleness still allows them to keep a distance.

An interesting property of the yaoi genre in Japan is that there are some very strong clichés cum traditions:

  • The seme/uke scenario: portraying the lovers as equals acting on mutual agreement is simply not done. At the very least the seme must push the relationship and the uke must resist it (at first).
  • The height rule: The seme must always and without fail be taller than the uke. If the heights and natures of the original characters don't fit, they are adjusted, e.g. a short agressive character is either made taller so that he can be seme, or his behaviour feminized to turn him into a proper uke.
  • The hair color rule: The uke has fair hair, the seme has dark hair. As with the height, adjustments are often made to make the charachters fit the rule, though it's not as strictly "enforced".

Note that what I wrote applies to the yaoi doujinshi scene in Japan. There, the fans seem to care little about plausibility or the distortion of characters, unlike (as Mishaela writes) the derived English-language yaoi fanfiction scene.