One thing that I have drawn from panels and conversations was that when most writers write people-like-us (ie people whose background they understand deeply) they can nuance their depictions even when writing fairly formulaic tales. They have their own lives and the lives of people close to them. They have such a deep understanding of these lives that they may not even articulate that they are nuancing their characters - some writers tell me in class "This is the character forming itself naturally, telling its story." Those stories have been building up inside us, from people we know well.
When writers write people-not-like-us the vast majority of us seem to say "I need this kind of person in my story" and then nudge the person into the shape of the story. Much of this nudging comes from marrying popular stereotypes with the story needs, rather than developing the character from the same complex basis that people-like-us are developed. I heard several writers mention this at Continuum: the plot needed this gender or this sexuality or this skin colour and so a character was formed to fit it. I'm pretty sure that only minor characters were discussed in this context. It wasn't one writer or one panel - it was quite widespread. And not all writers work that way. I was concentrating on those that were talking about it, is all.
My half-realisation of the other day is that for some characters, this nudging isn't necessary. We have perfect character arcs for them. They're often the ones occupied by people-like-us, which is one of the many facets of this I need to ponder some more. But instead of choosing a minor sidekick to be the character that has thought deeply about gender identity and fought societal expectations to win through, why not make them the shepherd who becomes prince/princess?
There are so many classic fantasy plot arcs that would be enriched by making gender and sexuality core issues for the main character**. It adds to the richness of the novel to have a character arc reflected on more than one level. And it means that we can work with stories we know. We just have to learn to see and understand people who are different to us, which - to be very blunt - is something we ought to be doing anyway, as human beings.
*The little thing was the con lurgie. The in-between things were chocolate and books. Donna and Matthew don't know quite how much chocolate was packed into their car...
**This is what was staring me in the face and making me feel stupid. Angela Carter and others have written fairy tales along these lines, so why didn't I see it earlier?