Drag doesn't have to be sexual, but the most common form seems to be full of sexual innuendo and performing with half-naked male dancers. In my opinion, the drag kids are creepy and remind me too much of the creepy beauty pageants for small girls, but that doesn't mean a drag show with a kid has to have that sexualised aspect to it. This specific instance is unlikely to have had that sexual aspect to it, considering he probably just imitates the drag queens he sees on RuPaul's Drag Race who are somewhat sanitised for TV. But it's still not a good look - I'm just not convinced anyone watching it is a guaranteed pederast.
Still, performing at a gay bar at 3 am isn't a good look for any kid, drag or not. And while some kids are born performers, this is still a point where parents should be stepping in - there's child labour laws for a reason, especially for this sort of thing.