My children are all well grown by now. The question did not really arise with them, athough questions about sex-based stereotypes (what some of us still think of as 'gender') did. I am happy enough with how that worked out with my own children, at least, whether through mine and my partner's efforts at answering questions or not.
The question of changing sex and so on has arisen with more than one of my grandchildren, however, and as well as being faced with this directly, I have had discussions with my children and their partners about how to deal with it.
I have to say I disagree wholeheartedly with much of what QueenNooka has to say. It seems to me important that we tell our children the truth. As I have written on another thread recently in similar vein, this is more important than Santa Claus or the Tooth Fairy.
The truth? People cannot change sex. If you are born a boy, you will grow to be a man. If you are born a girl, you will grow to be a woman. No matter how much my grandson wants to be a 'mummy' when he grows up, he cannot. And so on.
Children often want things they cannot have, for one reason or another. It is our duty to let them know this, always in an age and developmentally appropriate manner, of course.
But what of people like QueenNooka's ex, who 'just know that they don't match their genitalia, as she says'? Equally easy peasy, but opposite to what QueenNooka suggests: such people are mistaken in thinking they are women even though they have willies ... and it would be kinder to not challenge them about that. Just as we would not tell a one-legged man who insisted he had two legs that he was wrong; it would be unkind.
There would also be opportunity (again, appropriately age and developmentally appropriately) to explain how we probably should not believe someone who tells us he or she 'just knows' something, if that person cannot explain how he or she came by that knowledge.
Lots of people think they know something-or-other, but if they are unable to explain how they know it, we have no reason to believe what they say. So we should be at best sceptical in such cases. That is a good lesson for children to learn in general, not just regarding sexual characterisation.
Of course, if the justification for claimed knowledge has already been debunked (for example see 'sex-based stereotypes' above), so much the more sceptical we should be - and so should we teach our children.