To me, it is really creepy when teenage and adult people yerk off to drawn images of underage Japanese schoolgirls. But what is more sad is, when they start to feel real love for them. That is very dumb... just as anime in general.
If I found out that a person I personally know regularly watches and/or masturbates to loli/shota, I would immedately stop trusting them with children, no matter how much they try to excuse it, or maybe even trusting them in general. Sexualizing children is disgusting, so yes, it is bad.
If the idea intended is meant for diddling kids, the person who has that idea is a fucking sicko.
Going off on a little related tangent, I don't get why anyone would be attracted to kids. They look underdeveloped and despite adorable, misshapen and immature, which naturally means as hands off as unripened fruit. Even realistically, most teenagers that don't look like 30 year olds look this way too.
Another thing is the style. Most realistic styles, yeahhhhh, I can see this being abused more in this case. For a style as stigmatized and stereotyped for loli and child porn, anime you can claim its about fairies and peris due to the toon physics of human anatomy.
What I think - Loli and shota and anything in that vein make my skin crawl a bit, but there are no actual children being victimized and as long as it stays that way I try not to care. I might side-eye anyone who professes to be an avid fan of it, particularly if what they like involves these fictional children sexually interacting with adults.
What I know - surprisingly little beyond the fact that this kind of material exists and some people like it. I am aware that children will occasionally engage each other in sex play but I don't know how unhealthy or harmless that is. I do know that an adult being part of that kind of situation, even as an observer of a fictional depiction of this occuring is profoundly aberrant and likely indicative of something even worse waiting in the wings. I also know the whole subject is so charged and downright poisonous that nobody but the most impassive scientist would be able to address it in the manner needed to completely quantify the threat it does or doesn't pose.