So I spent some time just a bit ago actually going through my account settings and what not and I removed the filter for NSFW results in my searches. I didn't know if foul language or some depictions of violence may force an NSFW label despite no sexual content. Then I did a search.
Wow.
Has itch always been this way? TBH, I am just going to start filtering those results back out. But I had no idea how many NSFW (sexual) games were on here. I'm not sitting up here on my moral high horse or anything. I am legit curious if there is a something about this platform that lends itself to being a preferred place to upload that kind of work?

This is exactly the same question as if it were about Steam and Newgrounds (or the world in general) - NSFW games and content have been around since the beginning. That's why there's a button to display NSFW content or not. Like... Are you embarrassed by the fact that people play these things?

I totally get what you mean. I’m not a particularly prudish person either, and I don’t have any issue with adult content in games as another form of creative expression, but I was also surprised by how many games of that type there are on itch. The sheer volume really stands out, especially when you’re browsing through new or popular releases.

I also find myself wondering why they’re so successful on this platform. Maybe it’s because itch.io gives creators a lot of freedom, or because there’s a big audience looking for niche interactive experiences that aren’t allowed elsewhere. Whatever the reason, it’s definitely an interesting phenomenon.

Speaking as a user of the site, some days it feels like there's a lot of them on the first page of results when browsing for games. At other times, it looks full of horror games. But today for example there's a nice balanced mix, with all kinds of other genres thrown in.

Regardless, looking at blogs or the press, I always see itch.io hailed as the last refuge of quirky self-expression for indies. Be it for games, zines or anything else, every other marketplace is basically mainstream now. We get the authentic stuff. That's not always neat, or even palatable. But you can't have the good stuff without the rest.

I've been using Itch for several years. It's true that games with sexual content have always existed, but I hypothesize that when other sites started banning this type of content, while Itch has never prohibited it (despite a couple of instances where they had issues), Itch has become a place where people can publish and play this content with a certain level of confidence. This obviously attracts more creators and players looking for that kind of content, resulting in a sizable community within the rest of the Itch user base.

Edit: 

With the problem of indexing paid games that contain NSFW content, I don't know what will happen in the next year, but lately I've seen quite a few games publishing free content or demos, and in some posts, some creators have hinted that publishing this type of content on Itch still gives them a lot of exposure.

About 2% of all games here are nsfw. About 7% of all games here are horror games. About 14% of all games here are pixel art.

Sooo, what's going on?

The average nsfw games have a lot higher quality than the hobby and amateur games uploaded. Like, really a lot higher. AAA studios are not really releasing adult games. So it is mostly an indie thing. And Itch is the place for indie games, be they nsfw or not. But combined with the higher quality and the fact that you can get regular "Indie" games with even higher production value on Steam, the apparant popularity of nsfw is quite high.

A similar thing can be seen with horror. Streamers like those and page 1 of popular is usually 90% horror. But horror itself is not actually all that popular on Steam. But in the indie sector it is. And again, Itch is the place for indie games.

As for being a preferred place, you can't upload a work in progress to most stores. They want a finished game. That goes for all kinds of games, of course. But the more finished and successful nsfw games will often be published on Steam.