I've come out from lurking on mumsnet just to reply to this because I have direct experience becuase my partner (my daughters dad) started transitioning when our daughter was 5.
We treated it the same way we'd treated her query (upon seeing a homeless man with one leg begging in the street) of 'why has that man got one leg'?
The answer was 'I don't know.... it'd be rude to ask him but it could have been a bad accident or maybe he was born with just one leg....'
She came back with 'but people always have two legs'... and here's the key phrase in all situations like this
'No' we said.... .most people are born with two legs but not all'
People come in all different shapes and sizes and colours and variations but 'most of them' are pretty standard in having two arms, two legs, one head etc etc
Easy conversation... and it set my daughter up to never judge a person based on difference.
Now, shortly after that, daddy began to transition and we were already on a winning wicket because we and our daughter know that not everyone is the same and we could explain that sometimes those differences aren't always clear from day one.
So when we got the 'daddy has a willy so he can't be a girl' it was an easy peasy step... not all people born with willies are men.... some people just know that they don't match their genitalia.
So she asked at one point 'so am i a girl?'
Do you feel like a girl. (and I guess 'do you feel like' can be interpreted as 'are you happy as')
Yes.
Then you're a girl.... that's pretty lucky that you match what we thought.
Had she said no we'd have simply gone along with it...kids who think they are something today are often something else tomorrow.. a cat, a tree, a boy...whatever they are trying things to see if they fit. But when a person of any age is transgender they 'know'...it stays with them and worries at their very essence and they don't grow out of it.
Our daughter is now in her twenties and she's a well adjusted adult who accepts people for what they are, she's grown up around trans people and hasn't a judgemental bone in her body.
I've no idea why people insist on trying to make the world full of 'definites' and 'absolutes' - children are great at accepting grey areas and differences.
Same when I used to teach primary children and kids would tell me 'boys can't wear dresses'.... and I'd say - of course they 'can' just because they don't usually doesn't mean they can't.
But 'why would a boy wear a dress'
I don't know...but probably becuase he thinks dresses are comfortable or pretty or his legs get too hot in trousers.
We used to have to do this with girls being doctors or fire fighters or whatever.... just because they don't 'usually' doesn't mean they can't.
Change can happen if children are taught to accept there are always more possibilities than the most glaring obvious thing in front of them.
I hope that answers your OP. I wasn't explaining all that to my child as a transactivist but as a parent but I guess becuase i lived through someones transition I became a transactivist becuase I don't understand why people would discriminate against anyone just becuase they're different or 'not normal'. people are people and every single one of them has a personal story that makes most sense to them and to those closest to them.