In the seminal Gender Trouble, Judith Butler pointed out how gender was in part performance-based, a fact that Disney has often depicted with cross-dressing and gender subversion. The company’s animators cite the drag performer Divine as the inspiration for Ursula in The Little Mermaid. Just as Divine was cast in Pink Flamingos because “society saw [drag characters] as perverts so they decided to revel in their status,” so too Ursula is marked a pervert by introducing sex to a children’s animated film. She encourages Ariel to use her body to lure the prince, and her magic not only gives the mermaid legs but also (presumably) a sexual organ, as Ariel emerges from the sea completely naked and must be covered up.
In another instance of gender bending, the Genie in Aladdin shapeshifts into many characters, including female ones, and even dons feminine clothes and underwear at different points in the film. Indeed, Aladdin’s romance with Jasmine is much less developed than his friendship with the genie, and his decision to free the genie provides the movie’s poignant climax. Robin Williams's character even acknowledges the queer undercurrent: “I’m getting kinda fond of you kid … not that I want to pick out curtains or anything.”
Another obvious example: Mulan, where the protagonist disguises herself as a male soldier. When the soldiers later dress themselves as courtesans so they can sneak into the palace, the film completes its theme of gender as performance, with women pretending to be men and men pretending to be women. Mulan’s “I Want” song also plays like an anthem for kids born into the wrong gendered body—“When will my reflection show who I am inside?”—and intriguingly, the film insinuates that her male captain fell in love with her while she was masquerading as a man.
More subtly, Disney protagonists often mature in ways that evoke the queer experience. In The Queer Child Kathryn Bond Stockton argues that queerness is not just about homosexuality, but also about growing in abnormal ways that makes the child an outcast. First there is “growing sideways”—children who in physical ways signify that they're different—which Disney has depicted through Pinocchio’s nose, Dumbo’s ears, and Rapunzel’s hair. Secondly there is “delayed growth” as seen in Peter Pan and The Jungle Book where Peter and Mowgli want to remain in Neverland and the jungle respectively so they won’t grow up. Similarly, the enchanted objects in Beauty and the Beast cannot grow until the spell is broken and they become human again, and Quasimodo and Rapunzel have been locked away in towers all their lives, precluding adult socialization. Thirdly, there is “growth by animals” where pets reflect the inner lives of their queer masters. Certainly this last conceit is all over the Disney canon, where aside from the obvious anthropomorphism of films like Bambi or The Lion King, there are also lots of animal sidekicks reflecting the emotions of their masters in films about human protagonists. Jiminy Cricket represents Pinocchio’s conscience, Ariel’s pet fish reflects her joy or sorrow, and even villains get their own vicarious pets, like Iago parroting Jafar’s evil.
Thus, Disney films have been both traditional and subversive, serving wholesome princess stories to a largely hetero-normative global audience while also subtly appealing to queer children. You don't need to be up on your queer theory or buy into the “It Gets Better” campaign to understand why any of this matters. Through conventional happy endings for outcasts and oddballs, Disney films let every child know that it’s ok to be different.