Language is an interesting construct, it is a construct intended to exchange information, emotion, ideas... but the inherent effect of this is that it also reflects strongly on the people using it, by virtue of how people attempt to use language to exchange this information.
When you use language you are in fact not simply using words but you are taking aspects of you mind, your thought processes, and everything that comes along with it and attempting to put that into the system of linguistics. So, then, when you communicate you're not only simply showing a sentence to the world but revealing significant portions of your mind.
Now, this may seem like a bit of hyperbolic and overly verbose absurdity, but it's really not. Just look at stuff like cold-reading for so called psychics, techniques that allow them to manipulate their victims because in their ignorance they reveal things and then conveniently forget, memory-edit or otherwise ignore that they freely handed all the information to the person conning them. This stuff is commonplace. People don't use words, they reveal facts. [Note: Cold Reading poor example, might edit blog to clean up later]
Now, let me give some examples, nothing too complex.
Imagine a child is angry and wishes to express his anger towards you. “You're a poopy-face” she says, in all seriousness. For a child, this is a fairly acceptable way to express anger towards a person. If an adult said that, in all seriousness (and that excludes the possibility of satire or sarcasm, or mental disability)... well, it'll give you insight to their mind. They have the belief that calling you a poopy-face is not only an expression of their anger, but one that intends to insult you.
The same example applies to any sort of random, non-empirically backed, word with a negative connotation used as an insult. The person is not using words that express a fact (Your face is made of feces) but rather, they're expressing an emotion they have and using words to do so. In reality, what “You're a poopy-face” means is 'I'm angry with you because you're a mean person.' None of the words the child uses has any factual content in it. There are 0 words that mean anything that correlate to reality. The notable part, however, is that the difference between the person saying, “You're a fag” and the child saying “You're a poopy-face” is effectively nil. The intent, an expression of anger towards someone, with a random word with a supposedly negative connotation, with no realistic grasp of the sentence's content. With the child, it's an understandable expression of anger. With an adult, it's literally someone so intellectually dead that they don't understand the sentence they're saying, quite literally, has no meaning – no truth value. It's just emotion bundled up in incorrect word usage because they're too stupid to express themselves.
Yes, the “adult” for lack of a better term, is on the same intellectual level as the child. No hyperbole, no sarcasm, it's a fact; the same inept flailing and predictable actions are there, because they're essentially the same. No factual content, no real insult. No picking a personal character flaw and bringing it forward and putting a voice to it, to cause anger, mock, hurt or cause any emotional upset to a person. Simply a random word chosen with a negative correlation, because they do not know how to express anger, and they're too ignorant to even know how to insult you.
Furthermore, the use of the word fag gives insight to a person's mind that said person uses that word in such a way they believe it has a negative connotation that it, somehow, would be scathing. Of course, anyone who isn't a dullard finds that about as offensive as... well, an adult calling you a poopy-face realistically, it's a joke. In fact, poopy-face is more hurtful, as at least there are reasons in which having a face of feces is severely negative... calling me homosexual is as hurtful as saying I'm attracted to brunettes, it's simply nonsensical to believe saying it is somehow insulting towards me. It merely mocks you, because you're stupid enough to believe it's offending and insulting me. You're calling me a poopy-face, in all seriousness and think you're insulting me instead of making me laugh at you. That's a level of stupid that's incurable.
Now, when someone says something like “You're a fag” they obviously don't intend to mock themselves, though they unwittingly do it by having the exact same wit, grace and reaction as a six year old. That, however, is the subtext of their use of language. That is one of the many facets you can peer into and see a person's mind. The belief that calling someone a poopy-face is not a mockery of themselves, but is in fact attacking the person they're directing it towards, is a significant insight into how that person thinks. Obviously, you're not mapping out a person's entire persona based on a single data point, but since everything a person does is a point of data we can gather enough information for inferences of varying accuracies rather quickly. So, when someone says something, that has no factual content, no wit, grace, prose, or even the slightest evidence and wishes that sentence to cause you offense... well... the person is beyond stupid. It is, as it often is, projection. If a person is trying to insult you by saying “You're a fag” it's most oft because they would be offended if someone said to them, “You're a fag” and I will say this: No one intelligent and witty, ever, will do anything but laugh at a person who believes that insults them.