It is a fascinating age. I think it is sensible to allow your child to explore their identity and watch it evolve. It is highly unlikely to stay static over the years and there is nothing wrong with being a gentle boy who has female friends and loves clothes.
Boys clothes can be exceptionally dull, in my opinion. Explore more exciting materials and colours, let your son have sparkles and sequins and silk. NOTHING wrong with having a huge dressing up box full of options, girls and boys clothes as well as costumes.
My DD was a dog, on or off, for several years, starting around the age of 5. She had shown signs of being a dog at age 3 and 4, but it really became a preference for her around age 6. I found it hard to understand, but she was absolutely convinced she was a dog and utterly miserable if we didn't go along with it.
Sometimes she would live at home as a dog for weeks and weeks, I tried my best to accommodate it as she was so unhappy being a girl. She spoke in woofs and informed us we would mainly need to talk to her in sentences that had a yes/no type of reply so she could give us "one woof for yes and two woofs for no". Eating was the biggest issue, as her tongue really didnt cope very well licking food from bowls. And drinking from her dog bowl was messy, but nothing a change of clothes and a towel couldn't sort out. She preferred to eat on the floor, for a period of time, but I do think she found it uncomfortable as she would only insist on it from time to time.
I was able to support her by allowing her to sleep in a "doghouse" at the weekend (den with a mattress), and she wore a leash at home made of a dressing gown cord, which she insisted I lead her round the house by. Her "dog name" was very neutral, so we could use it like a nickname in public without being "outed". She got very fast at bear-walking at home and in the park.
After several years she stopped being a dog altogether. She remembers the phase fondly and has a few times spoken nostalgically about it, but she is now happy as a girl and the idea of being a dog has completely left her mind. She is not a very "feminine" girl in some ways - she likes practical clothes she can climb trees in, wears her hair as short as I'll let her cut it, etc but she is definitely a girl.
I definitely think at such a very young age, identity is a fluid and wonderful thing, and imagination plays a huge part in it. Don't get too obsessed by your adult viewpoint on this. Let the phase happen, help support it where you can and see where it all ends up in a few years' time.