What about XXY?

Actually, language has gender, people have sex.

Really? In what way? How does it violate the rights of cisgender people at all?

Biological Sex:
The biological factors which determine your genetic and physical make up; controlled primarily by sex chromosomes, but other factors (such as hormone levels in the womb during fetal development) can influence this as well. The two most common chromosomal pairs are XX and XY, though there are many other possible combinations as well, such as XXY, XYY, or even just X. It's also possible for a fertilized egg to contain just a Y chromosome, but such cases always result in the termination of the fetus due to insufficient genetic material. In total there are about 52 different possible combinations of sex chromosomes, though most of the divergent combinations are extremely rare. It's also possible that a person may have a condition known as genetic mosaicism, in which a single individual has both XX and XY cells arraigned in a sort of checkerboard pattern throughout their entire body. It's rare, but it is possible.

Gender Identity:
The gender which you internally perceive yourself to be; controlled by a part of the brain called the bed nucleus of the stria terminalis (BNST). Males typically have a large BNST, while females have a small one. Most of the time this is perfectly aligned with a person's biological sex, though sometimes it can be inverted or even ambiguous. When this occurs in an individual, that person is said to be transsexual.

Gender Expression:
Your mannerisms, the way you present yourself, the way you speak, and the clothes you wear. This is the most flexible aspect of gender.

Sexual Orientation:
Who you are sexually attracted to; controlled by a part of the brain called the sexually dimorphic nucleus (SDN). Again, it's large in males, and small in females, except for gays and lesbians, who have an SDN the size of the opposite sex.

"transgender" is only real in the sense that nutjobs would rather mutilate their bodies, and batshit crazy doctors would empower them to do so, rather than get their minds treated.

It depends. Does your daughter who asked the question exhibit any tomboyish tendencies or displeasure at being a girl? Has she ever expressed any desire to be a boy?

When children ask questions about gender, and whether or not it's possible to change genders, it could possibly mean that child is experiencing gender dysphoria and wants to know if there's a way out. Or it could just mean they're curious about the world and want to know how things work. It's difficult to say for sure without observing the child's behavior over a prolonged period of time.

But regardless, as long as you're teaching your kids to be kind and respectful towards everyone, including people who are born different, the details don't matter. Honestly, I don't think young children are going to remember the biology lessons their parents presented to them when they grow up, anyway.

A child's biological gender and gender identity are controlled by genetic factors beyond the parents' control. The type of clothing and toys the child is given to play with is really quite irrelevant. I'm not familiar with the case you're citing, but I expect the child in question most likely gravitates towards the toys and clothing which are most in line with their own internal gender identity, which is also most likely in line with their biological gender. Attempting to raise a child in a gender neutral environment does not produce a transsexual. It's something that's controlled by genetics.

Of course I don't think there's anything inherently wrong with providing a child with both boys' and girls toys', but the parents are being slightly naive. But as long as they're truly letting the child choose their own path, I don't think it matters.

I just reread both articles to be sure, and it does appear that they are both about the same case. Combining the information from both articles, it appears that what happened was this:

The former Orono School District, now known as Riverside RSU 26, forbid a male-to-female (MTF) transgender student, Nicole Maines, from using the girl's restroom after the grandfather of a male student complained. (Why does the grandfather even care? It doesn't appear to affect him or his grandson in any way.)

Initially, the local court in the area ruled against the transgender student, siding with the decision of the school district, but then the case was appealed to a higher court, which reversed the ruling.

Looking at the dates of each articles, I just noticed that The Bangor Daily News website posted their story on November 20th, 2012, while the ABC News story was posted yesterday. That would explain why the outcomes are different: the story on Bangor Daily is about the initial decision, while ABC New's story is about the reversal of that decision.

Except not. People just want to be able to pee in peace. That's all.