As a scholar who studies gender and sexuality, I can assure you that no language will ever satisfy everyone and new reasons to avoid this or that language will continue to arise.Judith Butler gives brief and readable examples of the internal conflicts between different queer factions in Undoing Gender.
That said, I'm guessing very few queer folks don't welcome the inclusion of this paragraph in the game. I was certainly happy to see it, if for no other reason than gaming culture at large harbors a lot of misogyny and homophobia and it's really nice to see such a high-profile game make a positive, inclusive statement.
We shouldn't let perfection be the enemy of the good, and we should celebrate these kinds of statements that go beyond individual preferences to be built directly into the game.
Indeed; the language thing appears to be outrage for the sake of outrage; or an unwillingness to believe that there are other legitimate positions.
That said, in a game like D&D, a character could literally be a female mind / soul trapped into a male's body or vice versa via evil magic, so there is also that aspect as well.
