Nancy being busy with her studies can't drive Mike to a party. Nancy one way or another gets Steve to drive Mike to the party. It's there that Steve has an encounter with Eddie.
Steve had already known he liked boys (and girls too for the record) but never though he'd actually ever be involved with a boy. That was until Eddie. And he just found out Eddie was gay through classic school rumors. It's just a little fun so what could go wrong? It's not like either of them are going to fall in love, right?