They are talking about things like Androgen Insensitively Syndrome where XY people are born with female anatomy. This is because the chromosome dosen’t determine gentials but rather the hormones that chromesome creates. In the case of Androgen Insensitivity the body dosen’t respond to male hormones so develops female gentials despite having male chromesomes because female is the default. Weiredly enough though the gonads are still male.

Could also be refering to Swayer syndrome.