Inclusion theater is a situation in which diversity and inclusivity are ostensibly practised and promoted but the methods used are only superficially helpful. They are often based on a misunderstanding of the relevant issues, and can make the situation for marginalised people worse by shutting down the debate, thus derailing and silencing.
Insisting that sex and gender are dichotomous has the appearance of being respectful towards, for example, trans women. In reality, it merely creates opportunities, like the genderbread person, to call trans women's genitals male and otherwise misgender them — while side-stepping criticisms of transphobia and transmisogyny.
Another example is the asterisk after trans.