There was actually a really good RFC -- if you're not familiar with these, they're normally the documents used to create most Internet standards, normally just address technical matter -- put out a while back, ".sex considered dangerous". At the time, Congress was considering passing laws to regulate obscenity on the entire Internet -- a lot of the infrastructure of which we in the US ran -- according to US social norms, because people were upset over access to pornography. While political speech is strongly-protected in the US, we do have an obscenity exception, and so pornographic content could be regulated in some forms, and had been, like on FCC-regulated broadcast radio and television. Parents were upset at this new Internet thing bringing lots of porn to their children, so the idea was "why don't we just create an adult space on the Internet and make all that adult stuff go there". And the answer here, which the RFC covers, along with some technical arguments, is that the Internet is global, and there are many different social norms around the world. You cannot just tell everyone to adopt your own. It doesn't work.
https://www.rfc-editor.org/rfc/rfc3675
Legal and Philosophical Problems
When it comes to sexually-explicit material, every person, court, and government has a different view of what's acceptable and what is not. Attitudes change over time, and what is viewed as appropriate in one town or year may spark protests in the next. When faced with the slippery nature of what depictions of sexual activity should be illegal or not, one U.S. Supreme Court justice blithely defined obscenity as: "I know it when I see it".
In the U.S.A., obscenity is defined as explicit sexual material that, among other things, violates "contemporary community standards" -- in other words, even at the national level, there is no agreed-upon rule governing what is illegal and what is not. Making matters more knotty is that there are over 200 United Nations country codes, and in most of them, political subdivisions can impose their own restrictions. Even for legal nude modeling, age restrictions differ. They're commonly 18 years of age, but only 17 years of age in one Scandinavian country. A photographer there conducting what's viewed as a legal and proper photo shoot would be branded a felon and child pornographer in the U.S.A. In yet other countries and groups, the entire concept of nude photography or even any photography of a person in any form may be religiously unacceptable.
Saudi Arabia, Iran, Northern Nigeria, and China are not likely to have the same liberal views as, say, the Netherlands or Denmark. Saudi Arabia and China, like some other nations, extensively filter their Internet connection and have created government agencies to protect their society from web sites that officials view as immoral. Their views on what should be included in a .sex domain would hardly be identical to those in liberal western nations.
Those wildly different opinions on sexual material make it inconceivable that a global consensus can ever be reached on what is appropriate or inappropriate for a .sex or .adult top-level domain. Moreover, the existence of such a domain would create an irresistible temptation on the part of conservative legislators to require controversial publishers to move to that domain and punish those who do not.
The shoe was on the other foot there -- it was us talking about our government limiting what other people in the world have access to, but the point, I think, remains the same.
