Honestly I think the best translation of the word "homophobia" is "the fear of homosexuality". People can fear it for any number of reasons, though I think one of the biggest is they don't understand it. A straight guy doesn't understand how a gay guy can love and make love to other men, since he has only ever loved and made love to women. Gay men, on the other hand, often go through phases in their adolescent development which causes them to love, or try to love, women. Thus, they understand how a man can love a woman and the term "heterophobia" has yet to be coined (I think).
How that fear reaches the surface is different for everyone. Some will keep it inside themselves and smile when confronted with that fear, preferring not exacerbate the issue. Unfortunately, many will try to do something about it. Like a person who fears spiders and is confronted by one, they will attempt to eliminate that which is frightening them through violence, or general malevolent actions (Proposition 8 comes to mind, among other unconstitutional laws).
But, that's just the ramblings of someone who got four hours of sleep, then washed and waxed his car, and then attended a 12 hours BBQ/Cruise/Birthday party. My head hurts.