A stereotype is an image of a specific group of people based on the general public's perception of that group. Most of the time, stereotypes are based on traits only common in the vocal minority or on the information received through the media.
For example, a Muslim stereotype is likely to be a violent terrorist, despite the fact that most Muslims are not such extremists -- after all, most don't see Muslim non-terrorists on TV or in real life (especially as the media by definition is supposed to pay attention to the extreme). Of course, expecting a normal Muslim to behave according to the stereotype would be highly offensive.
The same way, a stereotypical gay would probably be a flamboyant promiscuous one; while this is true for some gays, most will not look any different from straight men -- like many examples of Sexual hypocrisy do.
Liberals should try to avoid stereotyping other groups of people, basing their opinions on the whole group's words and actions instead.
Stereotypes can be jokes or comedic names that generalize an entire group of people. For example, how many rich white people does it take to screw on a light bulb? None, because they pay poor Mexicans to do it.
Or, how many police officers does it take to screw on a light bulb? They wouldn't screw it on, they would just beat the room for being black.