Saturday’s show saw professional dancers Johannes Radebe, Gorka Marquez and Giovanni Pernice don make-up and high heels to perform a medley of songs from the musical Priscilla Queen Of The Desert.
The routine, which also saw the trio brandish rainbow fans, prompted both praise and criticism from viewers on social media.
The BBC said it would not comment on the number of complaints received.
Responding to the critics, Craig said drag was part of “real life” and urged those who took issue with it to “open your eyes”.
He told the PA news agency: “I think they are ridiculous. If you can’t grow with society then turn it off. It’s crazy.
“You are always going to come into problems with someone complaining about something. But there was nothing.
“If people knew what Priscilla Queen Of The Desert actually was, like the musical and they saw that, then they would know that the boys were acting as these characters in the play.
“That’s the whole point of having musicals week and movies week, so you get to play these wonderful and vibrant characters.
“I’m sorry but this is a part of real life and if you are not going to open your eyes up to it then turn the TV off.”
The dance was led by Johannes, who last year made history on the show by dancing with fellow professional Graziano di Prima.
Craig also referred to the complaints Strictly received after Olympic boxer Nicola Adams made her debut this year alongside Katya Jones in the show’s first same-sex series pairing.
He said: “People need to open their eyes and accept that this is all-inclusive society and that is what we should be working towards.
“That’s what we should be opening our minds up to, not going against it and complaining about people having a great time and dancing in character. That’s just crazy.”
Five couples now remain in the competition, which continues on Saturday at 7pm on BBC One.