It's a craze for many of these preteens and teens. Some of these kids will be gender-questioning and really struggling with it, but many are simply joining in. A lot of it is the usual adolescent angst dressed up in new language, and a lot of it is playing out teen-to-teen, not under the careful guidance of a responsible adult. Of course!
I was reading a forum the other day, trying to understand all this better, and one teen was asking, is it possible to use pronouns "she/him/their" (as in, "can you pass him their cup of tea? She asked for milk and sugar.") And another replied, "sure! That's the great thing, you can have whatever pronouns you like." There was NO conversation WHY in the same sentence three different pronouns referring to the same person made any sense at all.
The next post was a teen asking about various gender identities, and the replies were fascinating, they read very naive and, dare I say it, quite cute. (Reminded me of when my 12-year old self was trying to decide if I fancied David S more than Richard T.) The reply I "liked best" explained that after trying out between various identities (many labels being thrown around here, like demigurl and agender) this poster had concluded they were gender fluid "but I'm always definitely 30% girl." How on earth was that measured?! Pretty sure no counsellor has come up with a formula to measure your % of girl or boy yet.
Many of these kids appeared to be identity shopping, exploring new ideas, looking for fashionable labels for themselves and the behaviours, clothing, language and hairstyles, internet hangouts etc that belong with the various identities. They have fun chatting about it, honestly. There is often no sign of emotional maladjustment, no true dysphoria or distress, no mention of counselling. The forum I read had bizarrely inane comments on the gender identities chosen like - "that one has a really nice flag" and so on. On one hand it is great these kids have a free space to chat about this stuff, but you read it and it just sounds like loads of young teen girls walking round the shops together. Straight and birth-gender acceptance is boring, frankly.
Anyway, if this is what is going on with your 7s i can understand your DD feeling left out.
My advice? If she's not into this yet, help her. Equip her with some language so she can join in the chatter. Have a look at some websites with her, and have a giggle at the people who identify some days as a rainbow, and think about some of the language and the ideas behind this. Allow her to think critically about what all this means. Her body is changing, or will be very soon. What DOES it mean to be a girl, to be a woman? How WOULD you know when you feel like a boy? What if a boy you fancy suddenly comes out as a trans girl, does it mean you are a lesbian? What if your friends are starting to judge you because you aren't gender-questioning? Explain that if you are a girl who fancies other girls sometimes, well you might be a lesbian or bi, but it is perfectly normal to have raging crushes on members of either sex as you ride the rollercoaster of pubescent hormones. It's also perfectly normal not to fancy ANYONE at this age, and it doesn't mean you'll grow up to be agender or asexual. If you want to dress differently to your friends, or wear your hair differently, you absolutely should. If you want to follow the crowd so you don't feel left out, well that's okay too. Messing around with an insincere gender identity isnt too serious, and you could have some fun with it and really think about these issues of what it actually MEANS to be gendered, and what the lived experience feels like.
I would certainly be encouraging her not to take this to heart too much, and not to feel she has to choose an identity and stick with it permanently (Au contraire, the fashionable thing is to change your gender around.)
It's always sad when friends change and grow away from us in adolescence, and it's disconcerting when you are not sure who your tribe is any more, and you can't contribute to the conversation very much. So give her some education, help her to think critically, encourage her to observe and not judge, let her decide for herself if she needs to join in with all this and support her through it. Don't promise her that her friends will emerge the other side same as before, but let her know that it will all turn out okay.
I definitely would NOT go to the school and find out what's going on. I'd be checking what internet sites these girls are visiting what forums they are chatting on, what apps they are using. Then I'd be monitoring the heck out of what my DD views, so I can keep pace with her and help her navigate a path through this in whatever guise she prefers - her authentic self, whatever that is at any moment, or an assumed identity to help her blend with the crowd a bit better.