Apparently there are two areas in Melbourne with a number of gay venues, one north and one south of the river. We had only time explore the northern one, around Smith / Peel and Gipps Streets, plus a short walk around St Kilda on the beach.
Dave showed us Melbourne's "gay beach", a stretch of sand next to the port but it was unappealing. Melbourne being situated on a lagoon-style bay cut off from the ocean doesn't make for great wave action. Of course we're biased because of our attachment to Waiheke beaches, but I couldn't see the appeal of spending a Summer's day next to container shipping and traffic. St Kilda proper is an old-style resort, complete with luna park, but it was cute and the food excellent (as it was in all places we dined). Acland Street is just what a beachside resort main street should look like: little traffic, outside dining and entertainment and a tram down the middle of the street.
The gay venues we went to were The Laird (149 Gipps Street, Abbotsford - train station Collingwood), an old-style pub with various bars and theme nights such as pool competitions, boot shining and leather parties, etc. The Sunday night we were there the local gay rugby team, the Chargers, was fund raising with a social BBQ. A friendly and laid back local pub, popular with more mature men. There is accommodation too but we heard it was quite noisy on weekends - perhaps you don't need or want much sleep then anyway.
Club 80 (NSFW link) (8-10 Peel Street, Collingwood - Smith Street trams) is a refurbished multi-storey warehouse designed as a social and cruise club, including a large (non-porn) movie theatre, internet cafe and social space. The upper floors are extensive cruising areas and spots for specialist sexual activity. There are regular theme nights for which you can dress up or down. The night we went it was Nud night, where the ground floor was re-created as a mosh pit. It was far too dark to be pleasurable or agreeable but obviously a lot of men like it that way considering there were about 150. Pricey entry at $18.50 but with those number of punters it'd be a surprise you came away with nothing.
Another popular venue just around the corner from Club 80 is Sircuit (103 Smith Street, Fitzroy - Smith Street trams), which some nights isn't exclusively male. A large cavernous pub with multiple pool tables and occasional theme nights, with upstairs cruising and cinema areas. The Monday night we were there was ButtNaked (check website for dates and entry conditions), which was quite fun seeing all those blokes - of all ages and sizes - play pool and have a swell time au naturel. The upstairs cruise area doesn't really work that well: there is a limit to the demand for glory holes and way too few R&R areas. But it was quite sociable and chatty, and there was an amazing turnout for a Monday school night.
Final word about our accommodation. We stayed at OzGuys, a gay homestay run by Mike and Mark, situated in a new South Melbourne apartment block 10 floors up and a great view over the city. Not extremely cheap in NZ$ but close to everything, walkable from town and includes breakfast. Highly recommended! (disclaimer: we paid for our accommodation)