This applies not only to gays but to everybody. The basic rule of thumb is just to test the waters and find out where you are most comfortable inside the country. Should you like to frequent bars, the major metropolitan areas offer a wider selection. Should you be seeking something more quiet, try San Miguel. Whatever you decide, best of luck.
All Mexican cities have a gay population.
You should not encounter gross discrimination or gay bashing. Being gay in Mexico is no big deal. However be prepared to be riduculed. Some of the people will laugh at you. The local folks won't be too amused if you make an issue out of it.