Charlie keeps referring to Manny Quinn as ‘gay’ because of the alleged quoted Rose gives him. After he and Rose have sex, he runs out, and Manny falls out... of the closet.
Notice the title given to the show was Two and a Half Men, as Jake was still a kid, so he was the half. Now that Jake is grown up he’s already a man, but Walden Schmidt is mentally a kid. He even takes Jake’s part in the opening sequence.
When Alan first meets Walden, he laments that he is "hung like a freakin' elephant". Walden just came from the ocean, which he remarked was freezing cold. Now, we all know what cold water can do to a person's manhood... it may in fact be even bigger.
Charlie's being a even bigger asshole in Season 8 makes sense, he's probably secretly dealing with losing Chelsea and it's how he dealt with it to feel better about himself.
Charlie Harper was once stated by a character to have slept with the entirety of the Sacramento area's female population, and was implied to have (however unknowingly) slept with people who were possibly married. The amount of people he slept with (in one episode its even implied to be on sight), which would have enough to have him either head for a venial clinic or have mandatory sex-offender registration and yet is even allowed to do some of these things in the public is... genuinely horrifying when really thinking about it.
It's more likely that Charlie's friend was exaggerating, and he expressed disgust at the idea that Alan thinks he slept with the two 16 year old girls who Jake may have slept with at the start of Season 8.
Jake's becoming even stupider then ever may be a result of both Judith and Alan giving up on him and not encouraging and motivating him and raising him.