Oh definitely, heck, in Animal Crossing they might as well just ask for your pronouns and nothing else… In fact doesn’t New Horizons basically do that? But I’m referring more to the more common scenario of “Beefy Guy” and “Curvy Cutie”, which we see in World of Warcraft, you can pick whatever pronouns you want but it’s going to go on either on testosterone fueled bearded Dwarf you’ve ever seen or the hourglass with pointy ears we call a Night Elf…
When you only get two body type options and neither have any level of androgyny, what does pretending they aren’t gendered when they clearly are accomplish? That’s the part I have an issue with, it’s dishonesty being masqueraded as progress. Either have androgynous character options or don’t pretend “Body Type A/B” is a solution to a problem.
I feel The Sims 4 gets this right by letting you pick between male, female, or a custom gender (where you can decide if the sims pees standing up or sitting down, whatever pronouns you want them to have, whether the sim gets others pregnant, becomes pregnant, both, or neither), and ALL THREE of them have a healthy amount of customization options to go for whatever look you want.