Saionji has a complex about people criticizing her due to her hobbies, so not only does she feel like she needs to hide her power level, but she also feels like her feelings for Tachibana are purely her yuri goggles being applied to herself, instead of genuine romantic feelings.
She thinks that actually ACTING on this "delusion" would be gross because of the aforementioned complex, and Io is trying to convince her that she's allowed to be a yuri otaku AND like real women too--it doesn't HAVE to be an extension of her hobby.
Tl;Dr: Saionji is traumatized and Io is trying to encourage her