Essentially, the Cotton Ceiling - with reference to knickers - is the term parts of the trans community have inventively adopted for the way that, however theoretically accepting of trans people a lot of progressives may be, when it comes to actually having sex with us, they vote with their ...um...feet.
This is not - to jump straight in and answer a crude debating point that has been made by the usual 'radfem' suspects - a matter of the trans community demanding access to cis people's vulnerable and reluctant bodies. It's a matter of asking the question 'how can you say you accept us and still have - as many people do - a blanket assumption that you would never ever sleep with someone trans?' I say 'people' in that sentence because the assumptions that create the cotton ceiling are not peculiar to cis, or if you prefer 'non-trans', people. It's an issue to do with internalised transphobia as well, and something that a lot of trans people have to face up to in themselves. I've not always been as good on this as I might have been.
What I will say is that it is a huge mistake for lesbian trans women to assume that it is only their issue. For one thing, it is closely linked with the issue of 'chasing' of straight men who fetishize pre-operative and non-operative trans women, or lesbians who fetishize trans men (often in a way that entirely disrespects their identity and treats them as a different flavour of butch women). For another, one of the major manifestations of the ceiling in our culture is the assumption that to be attracted to someone trans throws your own sexual identity into question - that a lesbian who fancies a trans woman has somehow gone straight, that a straight man who lusts for a trans woman might as well buy the Glee collected soundtracks immediately, that a gay man who falls for a trans man is on the slide to suburbia. What is always going on is an assumption that the person is the current status of their bits, and the history of their bits.
Which is about as reductive a model of sexual attraction as I can imagine.
All of this affects all trans people. Straight trans women face the possibility that male lovers will feel obliged to defend their 'honour' violently just as much as lesbian trans women face the possibility that their lovers will face ostracism by all their friends - at least one of my major past relationships broke up over that, and other lovers have had to face tireseome interventions by (now former) friends.
So, in the end, my substantive point is this - the cotton ceiling exists and it's an issue for all trans people, women, men and non-binary. It's a matter of transpobia, including internalized transphobia. Given the fact that access to surgery or even HRT is already in the US, and may become in the UK, an economic issue and quite often a racial one too.
To pretend the cotton ceiling does not exist is to deny an important component in transphobia. To pretend that it is only a problem for lesbian trans women is to breach solidarity, to give hostages stupidly to the likes of the horrid GallusMag who is already ranting about it.
Mostly, though, we need to talk.