The way I heard “Chicano” described (by Cheech Marin in a serious talk) was that Mexicans didn’t consider US born and raised hispanics to be “full Mexican”. They were like “chicklets (gum)”, little Chi-(mexi)canos.
It was a pejorative term that they (who claim the identity) sought to band under and ‘reclaim’ as they felt rejection from those in Mexico as well as the US.
The term Chicano had negative connotations before the Chicano Movement, and still is viewed negatively by more conservative members of this community, but it over time gained more acceptance as an identity of pride within the Mexican-American community in the United States.
The pro-indigenous/Mestizo nature of Chicano nationalism is cemented in the nature of Mexican national identity...
...At certain points in the 1970s, Chicano was the preferred term for reference to Mexican Americans, particularly in the scholarly literature.[citation needed] However, even though the term is politicized, its use fell out of favor as a means of referring to the entire population due to ignorance and due to the majority’s attempt to impose Latino and Hispanic as misnomers. Because of this, Chicano has tended to refer to participants in Mexican-American activism...
So it’s a nationalist identity based on genetics. How queer it all is
Nationalism for me, but not for thee.