Why are reading fairy tales so lewd? In Chapter 2, when Eto is wondering what she could do for Iono-sama (seeing how everyone has unique skills that served her and she didn't have anything), Iono-sama suggests reading fairy tales to her at night, which prompts Arge to call Iono-sama a Horny Queen.

Now at first I would have thought it was the suggestion of Eto being with Iono-sama at night which the explicit nature of the suggestion, but Eto asks Arge if "fairy tales" has that sort of meaning.



Later when Eto and Aida are talking, Aida mentions reading fairy tales to Iono-sama and Eto gets all flustered and says she looked it up suggesting that it's not the fact that it's at night but that Eto would be reading fairy tales which makes it lewd.



After reading the liner notes of Maria Watches Over Us some time ago, I know that some humor in Japanese language comes from puns on how words look very similar but have vastly different meanings only because of one character of the placing of a space.

So I am wondering, why is fairy tales so lewd? Is this some sorta of Japanese language pun?
The original dialog use お伽話 (otogibanashi), commonly translated as "fairy-tale".



The Japanese-English online dictionary, Jisho only states 1 meaning which is the most common usage:


  fairy-tale; nursery-tale


However, when referring to the Japanese-Japanese online dictionary, Kotobank, it states 2 meanings:


  
  A story (legend, folklore, etc.) for children to listen to. "Momotaro", "Kachi-kachi Yama"-type. Alternatively, as a trope, a fantastical story that ignores realism.
  A story which takes place while doing otogi.
  




In fact, when Aida told Eto about "doing otogibanashi at night", Eto was surprised, realizing it's about togi. (The translation is wrong, Eto didn't shout otogibanashi, only togi)



Now, what is (o)togi? Otogi is basically o (honorific prefix) + togi. Jisho states:


  
  Otogi: attending (upon); keeping another company​
  Togi: nursing; nurse; attending; attendant; entertainer​
  


While Kotobank states:


Otogi


  
  Accompanying other to kill time during the night. Alternatively, the person who does that.
  Attending someone's bedroom. Alternatively, the person who does that. Concubine; mistress​.
  [...]
  [...]
  

Togi


  
  Become a chat partner, humoring and entertaining them. Alternatively, the person who does that. Otogi.
  Attending someone's bedroom. Alternatively, the person who does that.
  [...]
  [...]
  





So, yes, it means Iono-sama invites Eto to accompany her at night, possibly also in her bedroom as a concubine, which is Iono-sama's objective from the beginning. Considering the nature of Iono-sama, it's not really surprising if it has something to do with lewd things...