You see, representation is actually insignificant
This change is so insignificant that most people will not notice it while playing the game.
It kinda is though. Why would your present gender not matching the gender you were assumed to have at birth be even remotely relevant to this game? How would you even know a character was transgender unless it's a plot point in the story? Do you go off physical presentation and how that matches up with your criteria for man / woman / male / female? Yikes! Wouldn't the revelation that the character was trans be problematic anyway, akin to deadnaming?
I feel like they want the kind of sterotypical representation that a transphobe would create.
I'd be interested to see what trans people outside of that nut-hutch have to say about what would constitute 'proper' representation for trans people in a game that never touches on trans issues.