It sure sounds extreme from a modern pov, but consider the context of the era.

People were much more tolerant of public nudity, atletes traditionally practised nude, brothels depicted images with sexual specialties like a shopping window and had curtains for doors. What Diogenes did was by all means scandalous but not that big of a deal nor a crime.

Diogenes philosophy was a direct call to return to nature, animals have no shame to have sex in public, so why should he? It be out of character to draw such unnatural line. There is the famous story of how he saw a slave drink from their hands and cursed himself for carrying a bowl all this time. The guy really practiced what he stood for.

Of course also worth considering, most that we know was writings of others in later times, we dont know how much is true and how much is rumour. Its just as likely he did so once to prove a point and it stuck.