^
Some people consider cuddling sex. Especially doing it nakid.
Which is irrelevant because Yuzu's insecurities are directly stemming from the fact that her partner apparently doesn't want to have sex with her. And this isn't even the first instance. Mei may very well be ace, but Yuzu isn't and that's something that should be broached, but hasn't yet.
Mei pointing out the they're engaged when she's already had a prior, annulled, engagement doesn't really speak to much beyond her duty to her sense of formality. Considering that Yuzu's first encounter with Mei was watching her make out with some guy, along with Mei running away from their relationship to attempt to go through with her prior engagement with some other guy, paired with Mei not telling her anything about whatever plans she has... well, Yuzu has every reason to feel frustrated with the repeated lack of solid, certain, intimacy or feelings of being desired. Hugs and kisses aren't cutting it, that's not just a reader demand, it's one of the character's own line of thinking!