A Female is a being that isn't interested in other Females. This poses a problem for Seduction attempts, which target random Commanders in the province; if the Seducer is female, Seduction attempts on a female target will result in a heinous Assassination attempt, as one party or the other decides to prevent this from going any further. This isn't the Female icon, by the way; whether or not a unit is female doesn't appear on the character sheet, though most nations have gendered names.

Good question! The Heart Companion of Middle and Late Arcoscephale is said to love other men. However, if he were labeled as female to make it so he weren't into females, that would mean he wouldn't be into other Heart Companions; which would be a problem, since the lore says that they are specifically into each other. Thus, Heart Companions are actually bisexual.

The Cat Charm makes units female, at least for the purpose of Seduction; granted, there are only two male Seducers (the Troubadour and the Incubus), but still. If you think a low-Morale commander would fare better in a duel than against the dice, give them this. If you want your male Seducers to seduce guys, also give them this; granted, Incubi can seduce guys sometimes, but most men aren't into other men.

Likewise, the Bear Claw Talisman was meant to remove the female trait in Dominions 5, but didn't work. It still doesn't work, because Female was made as a point-less trait, and items cannot remove traits without permanently removing them, and Illwinter doesn't want to have to recode an entirely different system it'll have to append to every single unit that only a few nations will care about.