It really is fairly simple. We're talking about transvestites. The Nazis persecuted homosexual transvestites because they were homosexual.
The Nazis didn't persecute heterosexual transvestites as a matter of policy, though they might have had a tough time if the authorities thought they were creating a public nuisance.
What we've got here is taking Nazi persecution of homosexual transvestites, mashing it up with the handful of transsexual people who had experimental surgeries at Hirschfeld's institute, and using that to ahistorically take the idea of a transgender identity and community which is barely 10 years old and project it back through time to foreground the modern identity among the Nazis' victims.
It's like saying goths and emo kids were victims of the Holocaust.