I have 2 sons aged 9 and 11. They both know how sex works from talking to kids at school. The elder one has had a 'sexual awareness' lesson from a specialist teacher (we had to give our permission for this). They both know what 'gay' means, I do not know whether the know what gays do in the bedroom, but if they asked me I would tell them, in broad terms, as I would tell them anything they ask me about sex in general.
I would not show them a porn film but I don't think I have seen anything on telly that I would not let them watch (we do not have sky so I can't speak for that). If they saw 2 women simulating sex with dildos and they asked me why, I would tell them, and I can guarantee they would not really give it another thought as it does not really apply to them at this age.
Sex is a fact of life and I don't know why we should hide it from our kids. I'm sure that the mystery we surround it with makes them even more eager to find out about it, children are very inquisitive by nature.
I think that being coy about sex and trying to pretend that it doesn't happen cheapens the whole issue and distorts a childs view of life, not to mention possibly causing issues for them later on, including (from what I have read), extreme sexual shyness and unplanned pregnancy.
I don't know whether this repressive attitude harks back to Victorian days when a child (and many single men) didn't know how a woman was built from the waist downwards but I think that whoever introduced this prudish way of thinking has a lot to answer for.