My manager is an acquaintance of my dad, is married, and he knows that I have a bf. After a few compliments I received from him and some others I felt amazing and when he asked me out I assumed it was a treat, it just didn't occur to me that he was asking me out. That was just a naïve mistake I made and cannot change but I agreed either way at the time.

I enjoy my job enough where I do want to stay and my manager has not made me uncomfortable in any way before this. He's treated well and have been accommodating for me as he could be

I think there's a lot to work with right here. Married, boyfriend, the compliments felt great, but you were legitimately naive. You love your job, and he's always treated you well. Personally, I think transparent honesty is the best medicine, especially if you emphasize how much you respect him and explain it in a way that is respectful, with no arrogance