Funnily enough, at the time (50 years ago) one common criticism of LeGuin was her lack of space battles and ray guns. Science fiction has always had those tropes and always will. Luckily, LeGuin brought more to it.

Replying for anyone reading this comment: Le Guin was a Daoist, but also, and concurrently, an anarchist. So much of her writing, especially The Word for World is Forest, parts of Earthsea, The Dispossessed, is informed by her anarchism. Very often you find Le Guin exploring ideas of an anarchist response to colonialism, or just enjoying setting out an anarchist society and imagining how it might work, how it would unfold, the challenges it would face, and the solutions people might try.

The social constructs were the entire point. The spacey stuff was just a vehicle to get a more relatable protagonist into the story.

In the foreward, she calls out to her, great SF is descriptive, not predictive. TLHOD is about sex, gender, friendships and culture in our world.

Also a huge number of spacey contemporary works like A Mote in God's Eye, Rendezvous with Rama, Dune, Ringworld...

She wrote a short essay on her blog about this: https://www.ursulakleguin.com/a-rant-about-technology

The TLDR is technology is how we cope with reality and for her it was more interesting to describe this reality and how it makes her subjects feel rather than describe the technology they use to address their problems.

what does space-y mean in this context? Spacey, as in trippy (vernacular definition), in the way that Phillip K. Dick is? Or set in outer space?

If the second, there was a lot of sci-fi set in space for decades before The Left Hand of Darkness, and the cultural focus of that book and a lot of the new wave of science fiction writers of that time was a reaction against the outdated space focused science fiction of the previous generations.