It means the person they are talking about is so gay that he cannot work, do things or live his normal life. Here are some some examples using function: - I can't function in this dirty kitchen. -Can you function in a loud place? I hope this answers your question.

try not to use it, you might offend gay people by saying something like this.

It means that he so effeminate, that he probably can't function as a heterosexual male would with a female.