I really think the damage starts in the home with parents of gender non conforming children. I think that's the start of the hang up. I think all nebulous identity issues start in early childhood and are compounded by wider homophobia in society.
That might be the case sometimes, but I'm not so sure I think it always is what is going on.
I have been wondering if there isn't an effect from putting so much emphasis on kids forming or labelling their identity, particularly (but not exclusively) their sexual identity, at quite a young age, often right at the beginning of puberty or even before that.
In a real way though this idea of identity is just an overlay or construct. What we all are in the end is people, variable, in a particular material circumstances, but with our sense of who we are and even our experience of it changing over time.
If you see yourself as a person first, if that is somehow strongly rooted, than the rest you can cope with. Maybe it's pretty stable and maybe it's not, and you can decide what to do with it in your life too.
If you find you are a gay man and it seems a permanent state of affairs you can decide to go be a drag queen and have sex with dozens of hot pool boys, or become a monk, and you are still rooted in your personhood. Or you can do one and then the other, if that's how it turns out. Or maybe even your sense of your sexuality changes over time. You are still you, though. A big change will be hard, but not self-destroying.
But if you need to know your "identity," something that is always culturally and temporally determined, and that tells you somehow what you need to do or be to have a fulfilled life, that seems very fragile to me.
And all of these young people who are still forming these identities think they are nothing without them, and they don't know what to do or think without an identity to tell them.