Land snails, upon which Dragon Ball Z’s Namekians are based (Piccolo, Nail, Dende) are intersex, meaning that they are capable both of fertilizing another snail’s eggs and capable of laying fertilized eggs at the same time.
Land snail mating behaviour is quite complex, featuring courting dances, three or more -somes, and half-siblings born in the same clutch of eggs.
We leave this kind of speculation in Namekians to fanfic authors, but suffice to say that Namekians’ earthen relatives are anything but asexual.
According to Dragon Ball Z mangaka Akira Toriyama, Piccolo’s species is gender-nonconforming.
(cn: both older and contemporary translations feature the slur ‘hermaphrodite’ to describe Namekians, where intersex/nonbinary/trans masc would be better fitting words)
The “strange method of reproduction” is that they lay eggs out of their mouths. This recalls snails, whose mating apparatuses and ovipositers are located on their ‘necks’. So, a snail in the act of laying eggs might appear to be ‘spitting out’ the eggs.
Many other invertebrates and non-mammalians reproduce via eggs or other methods besides pregnancy and live birth.
It doesn’t make these animals ‘asexual’.
Fertilized egg clutches can be laid after mating with another conspecific adult snail and/or when the snail is alone/in captivity, using sperm stored from a previous mating.
(The latter ability may be why there is confusion in the fandom and in general about whether Piccolo is “asexual”… let’s not kid ourselves, @teamfourstar-blog had something to do with the popularization of this theory… but to set the record straight):
The idea that Piccolo (and all Namekians) are ‘asexual’ is grounded in the patriarchal, homophobic and cissexist idea that conflates gender identity with sexual orientation: thus, the only valid type of “sex” is between cishet men and women and involves the possibility of fertilization and pregnancy.
This doesn’t exclude the possibility that Piccolo or any other individual Namekian’s might identify as asexual/aromantic.
It’s also compatible with canon, which explains that in recent Dragon Ball history, only select Namekians have been tasked with birthing eggs (Grand Elder Guru, Moori):
It is arguable based on canon that Piccolo himself may be ace-aro.
But, we have no reason to believe all Namekians share the same sexual orientation as Piccolo. This is like cissexism/cisheterosexism among humans.
Sexual orientation ≠ gender identity!
So, now that we’ve established that sexual orientation and gender identity are separate things, we can describe Piccolo’s orientation as ace-aro, gay, queer etc., and identify his gender as gender-nonconforming, trans masc, intersex or any other terms that recognize his presentation and self-identity as masculine or male.