This decides whether the game calls your character “she/her” or “he/him”—but only when you have your pronoun setting on “Auto.”

• If you've set your pronouns to a specific choice (like always “he” or always “she”), the game just uses that. Simple as that—no guessing involved.
• But if you set your pronouns to “Auto,” the game tries to guess based on how feminine your character currently looks (your overall appearance level from crossdressing, hormones, etc.).
  • At most appearance levels, it's straightforward: look feminine enough, and the game calls you “she.” Otherwise, “he.”
  • When you're nude, though, it's a toss-up on looks alone—so the game breaks the tie using two extra details: how big your chest is, and how long your hair is. Bigger chest, or a medium chest paired with longer hair, tips it over to “she.” Otherwise, you're still “he” when nude / lewd.

In short: Auto mode means the game is constantly reading your character's body and looks to decide which pronoun fits best, rather than you locking it in yourself.

Some of the images also use the identity, but some use hair length / chest size. I tried to pick based on what best represented your character.