I'm not in the mood to look it up, but the most recent hypothesis is that gender identity is based on a specific component of the brain. I know I don't exactly have the most detailed explanation in my hands, but I look at gender identity as the same sort of spectrum that Kinsey had for sexual preference. And just like sexuality, most people land up in their expected side. But, there are people who are in the middle, and those who land on the far opposite site. Men to Women, Women to Men. And, this can apply to people who do not identify with the opposite gender! Many people land in the middle and are most confortable with masculine and feminine characteristics.
Let me explain further. I personally do not like to use a scale of 1 to 5 like Kinsey since it is too basic, so I'm going to do a 1 to 10.
1 will be completely feminine, think Elle Woods from 'Legally Blond.':
2 / 2.5 would be for Karolina Kurkova and Andrej Pejic
4 is Ellen DeGeneres:
6 is Zac Efron:
7.5 would be David Beckham:
10 will be completely masculine, say like 50 Cent:
Now, per people with GID,
1 would be for Caroline 'Tula' Cossey
10 would be for Buck Angel:
Now, I know this is only appearance, but behavior is also the same way. You see, people even without GID naturally have a gender identity they fall in, regardless. Some are more in the middle. Some are at the ends.
Ellen DeGeneres (who I love, btw) is not the sort of girl who's going to be running around in skirts all day, getting her nails done all fancy, shopping for the latest jewelry. That's not how she naturally is. Sure, she can be fashionable, but it's not going to be in the most 'femme' way and her personality is a lot more 'tomboy.' Likewise, Zac Efron seems to actually be wearing makeup in the photo and I'd be surprised to hear him playing football with his friends. What i'm getting at is that gender identity varies person to person and is not always what you expect, know about yourself or even what people display.
So, with that explained, you must remember that crossdressing, independent of gender identity, is a 'kink'. It's something that gets a person's rocks off, just like, someone can get their rocks off from leather, or PVC, or beind dominated or dominating. Yes, they're all different, but they all give a person a 'kick.'
With that being said, that's how it gets blurry. There are crossdressers who are any point on the scale of 1 to 10. That's how you get the hairy linebackers with heels and nylons shocking you on the corner in a city. They're a 10, but getting the kick of being a CD. And, there are crossdressers who are, of course a 1.
And, most people are NOT aware of where their natural identity falls in the gender spectrum.
But, for those not on the matching side of the scale, there's a problem. You see, when all is done and you're in drab, something's not right. You're still not yourself. And, eventually you learn that feeling, that understanding is inescapable. Then you learn, there really wasn't much a kick (sexually) in the first place. It was more freedom to be yourself. And, then it's whatever path you take to being or not being who you really are (being transgendered).
Is this a little clearer?
Lastly, know that the true bluriness is for those in the middle. There are people who have some GID, and some of the crossdresser kink. And, for those people, they may never come to a balance and understanding, since the both overlap. But, that is the how and the why to it all...