Long story short, Allen (the half bunny half skeleton dude) never had  celebrate his own sexuality before since  where he's from, all different sexualities and genders were so normalize, it never became a thing to celebrate about.

So the whole gang decided Pan would be a theme to celebrate, wanting Allen to be part of the celebration of his own sexuality.
He was surprised and confused yet happy about it

The rest of the gang's name
Belinda (the girl floating)
Teddy (the blue hair girl)
And Angel (the zombie guy)