The DSM is the handbook used worldwide by healthcare professionals as the authoritative guide to the diagnosis of mental disorders, what is also referred to as mental illness. In 1973, the American Psychiatric Association (APA) removed the diagnosis of “homosexuality” from the DSM2.
In 1974, the Canadian government acknowledged and recognized that homosexual orientation was normal and no longer a mental health issue requiring treatment.
Before 1974, if a person was openly gay with their family and friends they risked being committed to a mental institution. This was a very real risk. The option to be visibly and openly gay broadens a person’s access to healthcare in general.
De-pathologizing homosexual orientation also opened access to more political and legal rights. Gay activist could now openly demand the same rights as every other citizen, and openly gay or lesbian parents were less likely to lose custody or access to their children in a divorce case.
Changing the designation in a diagnostic manual doesn’t appear to be as monumental an event as the Stonewall Riot, or the Toronto Bathhouse Raids, but it was in fact a major step towards visibility. It is a consequential achievement in the long history of normalizing sexual orientation and gender identity.
It should be noted that it is difficult to pinpoint a singular moment where the "de-pathologizing" of queer and trans people took place since it was a change only to the classifications of the American Psychiatric Association in 1973. While this had an impact in the 'Canadian' context the position of the World Health Organization (WHO) was not changed until 1991. Until the late 1970s other manuals, like the Statistics Canada's Manual for Classification of Psychiatric Diagnosis listed "homosexuality" as a "mental disorder" and the Canadian Public Health Association distributed WHO's position in its Mental Disorder Glossary and Guide until the WHO position was changed.