The first is Sex and it has the options of Male, Female[...]The 2nd field is Gender and it has many options and is editable so that you can add whatever you like. This is what you choose to identify as, or as I crudely put it, what you choose to do with your genitalia.
Sex is essentially only male or female (genetically speaking, and in 99.99% other ways). Then there is sexual orientation- who you choose to have sex with (what sex you are attracted to, or not). Of which there are essentially only four: Heterosexual (opposite), Homosexual (same), Bisexual (both), Asexual (none). Although that can be complicated by the whole "gender thing".... The other, newer thing, is "gender." Medically, gender and sex were the same thing until not that long ago. Now gender has been redefined to mean which sex you think you are (feel like), or how you present yourself to others. Like sex, there are really only two rational gender choices: male or female (although a myriad of somewhat or outright ridiculous options are now claimed).
Personally I could care less what anyone's Gender is unless I am going to be in contact with their genitalia.
Medically speaking, like you pointed out before, it is important to know the sex and "gender" of an individual, so that a medical team knows that what appears to be one thing is not something else, since that can drastically affect diagnosis and treatment (like you already indicated). Even that is complicated for a variety of not-so-conversational reasons
Knowing sexual orientation, however, is typically not needed for medical treatment or diagnosis because it affects nothing physically.
The team I work with has several of the non-binary Genders represented and they are all good people and some of them have become friends.
Oh, no doubt. There are nice and not-so-nice people of all walks of life, and I would treat anyone/everyone with dignity, politeness, and respect. Although I wouldn't necessarily corrupt my language... "they", "them" and "theirs" are not singulars, and I will not play word games like "zim" and "shim" and "gee" and such nonsense. I will "pronoun" people with that which best matches how he or she appears/presents/sounds, or probably requests (although only he/she, and I have never run across that last situation yet). Quite frankly, I think the whole "non-binary" thing is mostly a desperate attempt to gain special treatment/attention and sometimes a psychological disorder.
The sports and bathroom complexities are legit concerns. As is the gender confusion/indoctrination and sexualization of pre-pubescent children. The gender social contagion is almost epidemic.
So.... to bring back to topic, I guess what people are is now a lottery