Many people recognize that gender – how a person identifies, presents themselves and is perceived – has nuances. Some people identify and present as women, others as men, and still others as nonbinary.
But there is a common misconception that biological sex – usually determined by a person’s sex chromosomes, gonads (ovaries or testes) or genitals – is binary. This idea assumes that everyone is biologically either female or male, with no ambiguity or intermediacy.
I wouldn’t use that feature. Transphobia is against my instance’s TOS and many other instance’s TOS so if you’re silently filtering it out, you’re not reporting it and leading to those pieces of shit being banned. Which stops it outright.
Report stuff like that when you see it. Report it to instance admins like I do. In time people will learn to hold their tongue or just be too banned to say evil shit like that.