Gah! I was looking for info on German use of trans-preferred pronouns and got sidetracked by a poll asking if Rowling was right to say transwomen are not women because they don't menstruate.
It's infuriating! The poll results so far are 50+ yes they are women and 40+ no they aren't; with a whole lot of comments saying how stupid she was for saying that. So I spent a lot of time and words setting them straight: that she NEVER said that, and what she actually said, and that most transwomen have intact penises (most comments seemed to think they'd had surgery).
I think that Germany is just at the start of this whole rigmarole. Very few people seem informed of what is actually going on and only in a very vague way. A friend of mine, a long time feminist, had no idea at all. There seems to be no women's rights movement fighting it.
German does have a third pronoun, it, and all nouns are all he, she or it.
The neutral one cannot usually be used for people (obviously), except when the word has certain suffixes (das Maedchen, girl), and certainly won't be employed by non-binary or whatever people there.
Germany has two words for sex, Sex and Geschlecht, and Geschlecht is probably the equivalent of gender, but does definitely mean biological sex as well. They are more or less synonymous, but Geschlecht cannot be used for the sexual act except as a double word, as in "Geschlechtsverkehr", sexual intercourse.
When a baby is born and on documents, you'd say Geschlecht, and it means biological sex.