Yeah, he knows that, but he's also feeling just as vulnerable here as Spike is and he's going to take stuff personally. Especially when it's not the first time Spike's made a comment like that, the kind which makes him wonder as much as Spike clearly is whether they're ever going to work this thing out between them.
"Well, 'kinky fuckery' sounds pretty offensive!" he points out, and he's frustrated because Spike seems to be missing the point again. "And I'm not expecting anything from you. Nothing at all. I told you I wouldn't push for sex and I meant it. And I've got the message that BDSM doesn't interest you and so I'm not expecting that from you either! I just wish you wouldn't be so dismissive of the things that matter to me when I'm trying so hard to understand the things that matter to you!"