The Sims 4 actually added a similar approach to character creation about 2 years ago, but very different kind of game with a very different market
Off the top of my head it has options for male presenting body type, female presenting body type, sliders for fat and muscle (and you can generally reshape most of the body) and the available clothing and hairstyles got sorted into masculine and feminine with I believe more traditionally gender neutral stuff getting placed into both, then for biological purposes there’s “can pee standing up/cannot pee standing up” and “can impregnate/can be impregnated” It defaults to Male/Female defaults but makes it easy to customize, and a good mix of default townies (NPCs) are all over the spectrum.
They also recently added more complex relationship and romance preferences, so sims can be sexually bi but romantically straight for example, but also expanded to allow various levels of openness to relationships as well as poly relationships