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GeniUs Physiological intersex is a real thing; the ancient Greeks carved statues of what we now call hermaphrodites. Some people are born with partial genitals of both sexes. In the modern era, sometimes doctors cut and stitch in the genital area to make a baby fit better into one of the two sexes (and sometimes those cutting and stitching doctors make the wrong decision). There are people born truly intersex. There are people for whom it is a lie to say either male or female, even if the passport categories don't include it.
It gets even more complicated. There is genetic mosaicism including absorbed twins. It happens in nature. There are humans walking this Earth who have XY in some cells and XX in other cells.
According to Dr. Anne Fausto-Sterling, a recognized expert in this field of study, 1-1/2 to 2% of all births do not fall strictly within the tight definition of all-male or all-female, even if the child looks "normal." In reaching her numbers, Dr. Fausto-Sterling counted all incidents of intersexuality, from mild to extreme. The incidence of children with mixed genitalia is pegged at 1 in 2,000 to 1 in 3,000, or 0.033 to 0.05 percent of all births.