But with sex-based roles? Two don't really make a fair competition, do they? I mean, otherwise there wouldn't even be a need for per-sport subclasses.

Sports is full of divisions. Division by age is the most common, followed by division by skill, and division by sex. Some sports use extra divisions by weight. Some find age/sex/skill to be enough. In some sports, especially at lower age or skill levels, co-ed is common (division by sex is not used). There are also divisions for people with physical disabilities, sometimes with tweaks to the rule to accommodate.

In all cases, the purpose of these divisions is to find a balance where everyone can get a fair matchup.

Trans people and people with certain genetic mutations are very, very common though. We're talking about more than 1% of people here. Shouldn't there be a need to ensure they too can compete fairly?

Absolutely 100%. I think everybody should be able to participate in sports, and I think that rules about sex divisions should be modified to account for trans people and people with gender-related disorders. I don’t think just letting people choose a division is fair though, there should be rules for consistency and fairness.

The border of the divisions is always at least somewhat contentious because people just before the cutoff have an advantage. Many high-level athletes have similar birth dates because they were born just before the age cutoff growing up. Being slightly older in the age divisions gives an advantage, and that leads to performing well, which leads to feedback loops such as coaches and parents and the kid noticing the good performance and focusing on the sport more. This ends up in more kids who were at the edge of their age range growing up becoming successful athletes as adults.

Also with weight-based divisions, it’s typical in higher skill levels to body-build to slightly above the cutoff and then avoid drinking water for a day to get slightly below the cutoff.

No line you draw will be perfect, but you do have to draw a line somewhere.

Imagine if in the early 1900's it was discovered that left-handed people are on average slightly better at math than right-handed people. As a reaction, all left-handed people are excluded from math scholarships as they have an unfair advantage over right-handed people. Would you consider this fair? After all, they only made up ~2% of the population and we have to draw the line of who gets a scholarship and who doesn't somewhere.

There are a some problems with this analogy. Scholarships are very different from competitions (although sports scholarships exist, which is a whole other topic to discuss…). Also the gender case is looking at the edge cases of an existing cutoff, which is not the case about left handed people, unless you want to hypothetically add they might have some relation to some other grouping.

I’ll offer some analogies that I think might be similar. What about someone with developmental issues who was held back in school? Would it be fair for the other kids if they get to play sports with the younger age group because of their mind? Would it fair for the kid who was held back to have to play in the older age group because of their body? What about someone who has a condition affecting their weight? Should that condition let them compete in a lower weight class? I’m not saying I have the answers to these scenarios, btw. I think a lot of it comes down to a case-by-case basis, and guidelines with leeway for exceptions are probably better than strict rules.