Summary:
They replaced the separate male and female 3D models with a new unisex model, then autofitted all of the poses, hair, and clothing, and released the whole clusterfuck in its early beta stages. They likewise created new skin and hair shaders that are not compatible with the current hair and skin textures.
Their obvious motivation for doing so has zero to do with inclusiveness and everything to do with cutting costs by halving the amount of effort needed to create new clothing and hair. Except that this concept has been done before, and it turned out that the opposite is true because it's actually incredibly difficult to make clothing for a male/female unisex 3D model.
https://gamefaqs.gamespot.com/a/forum/f/f7387d21.jpg
So now the morphs look ugly (though I'm reading on Resetera that the boob problem isn't remotely as bad as a lot of people are claiming), the clothing is deformed and no longer fits, the poses no longer look right, and the new morphs (sliders) are incompatible with the old stuff and default morphs.
https://gamefaqs.gamespot.com/a/forum/9/923fdd54.jpg