What does "you know what" mean in gay sex?

A double meaning. One in which it refers to having intercourse, where penetration occurs. That is the more popular of the two meanings. Another meaning is in reference to a woman's vagina.

Definition

In a popular meaning, similar to the phrase 'going all the way' or 'hitting a home run' when referring to a person's last date, or night out.

Usually used by those trying to be discreet, or to avoid directly asking a question, due to the surrounding company.