1. A really, really homosexual male.
2. An otherwise straight man who gives it to a homosexual man in the butt- not because he's gay, but because he's just desperate to pump his semen into Fairy Fucker in this case would signify the "giver", not the "taker". The receiving person would be known as the "Fairy Fuckee".
3. A far more colorful way to call someone an idiot. (Simply replace the word "gay" with "fairy fucker" in your pleasant day-to-day conversations at the water cooler)
Fairy-Fucking (ex: a gay dance teacher = a fairy-fucking dance teacher)
Fairy Fuck, (past tense: fairy fucked)
This phrase came about because a "fairy" is a well-known vernacular for a gay dude, and, when this fairy decides to fuck, it is, well, really gay.
See also: rainbow rammer