Gender, according to the American Heritage Dictionary refers to:

1. Grammar
   1. A grammatical category used in the classification of nouns, pronouns, adjectives, and, in some languages, verbs that may be arbitrary or based on characteristics such as sex or animacy and that determines agreement with or selection of modifiers, referents, or grammatical forms.
   2. One category of such
      

      a set.

   3. The classification of a word or grammatical form in such a category.
   4. The distinguishing form or forms used.
   5. The condition of being female or male; sex.
   6. Females or males considered as a group: expressions used by one gender.
2. Sexual identity, especially in relation to society or culture.
3. The condition of being female or male; sex.
   1. Females or males considered as a group: expressions used by one gender.

Etymologically, gender entered Modern English via Middle English gendre, from Old French, where it meant "kind, gender," and was borrowed from Latin genus, gener-. The Proto Indo-European root is *gen?-

The concept of gender was originally purely liguistic; it has been co-opted, or usurped, even, for discussion sociology, psychology and anthropology. In linguistics, by the way, the masculine, feminine, or neuter gender of a word has nothing to do with the meaning of the word; it is rather about the morphology, the internal vowel changes, and suffixes (or sometimes, prefixes) of the word. Feminine gender words were thus described because they changed frequently over time, and linguistics thought that made them "weak," since they changed, when other vowel patterns were consistent over time and were perceived as "strong." Thus the "weak" patterns were called feminine, the strong ones masculine and those that were consistently inconsistent were called neuter. This is why in many Indo-European languages we have a word for woman that is masculine in gender, or for "maiden" that is neuter, or why some words have changed gender from masculine to feminine, or the other way around.

People frequently confuse sex, which is biologically determined, and relates to XY and XX chromosomes, (mostly; there are other chromosome patterns), with gender. You'll note that the conflation of gender and sex has managed to invade the dictionary. Even now, when gender is increasingly used in less than ideal ways though, there is a distinction (Federal and employment forms aside) made between sex and gender.

Gender refers to roles, not biological functions. We can change gender, without changing our genitalia. We can change our genitalia, without changing our gender, because gender is part of our behavior and not our physical bodies. Sex is, crudely put, between our legs; gender is in our heads, and our cultures. Cultural expectations assign gender roles (the behaviors of a given gender) to people based on perceptions of biological sex, with male or female as binary choices. There are gender expectations within cultures and societies that are generally based on assumptions about sex. As individuals we also have a gender identity, a set of behaviors, roles, and expectations that we feel comfortable with personally. Sometimes the gender role expected by society does not match with our gender identities, or our sex. That's the reason for concepts like cis gendered, and its relatives, and transgendered and transexual. But even with efforts to use non-offensive terms, we still have the basic conflict between individual's feelings, and behavior, and the expectations and assumptions of others.