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I found this decision to be really troublesome. Here's the gist of it:

“Displaying passport holders’ sex at birth no more offends equal protection principles than displaying their country of birth — in both cases, the government is merely attesting to a historical fact without subjecting anyone to differential treatment,” the justices who sided with the Trump administration wrote in an unsigned order.

This is a very much a good point about how US law provides equality but not equity, as pointed out in https://www.marinhhs.org/sites/default/files/boards/general/equality/_v./_equity/_04/_05/_2021.pdf

Here's a good picture explaining the difference, https://assets.aecf.org/m/blogimg/Blog-equityvsequalityexmpl-2023.png

(Source: https://www.aecf.org/blog/equity-vs-equality )

Basically, SCOTUS got it right on equality - everyone gets a passport with marks based on their historical circumstances, just like everyone on the left gets one box to stand on to see over the fence. But just as some don't need a box, and for others one box is not enough to look over the fence, having a passport with marks based purely on historical circumstances doesn't work out the same for everyone.

On the right side of the picture, the tallest person has no box as they don't need one to see. The middle person still has one box and is still able to see. But the shortest person has two boxes, and can finally see over the fence. Like the tallest person with one box, for those of us who are cisgendered and not intersexed or non-binary, a passport with marks based solely on historical circumstance works out just fine. But transgendered folks are like the shortest person in the picture - what is offered isn't what is needed.

A passport that shows only one's birth-assigned sex will obviously conflict with how a transgendered person sees and presents themselves. Potentially it may serve to "out" them, perhaps in an area of the world that is hostile to such individuals. Thus despite having an "equal" passport, they are exposed to additional harms and risks that a cisgendered person would not experience. They need an "equity" passport - one that provides them the full protection that the US of A is able to offer.

And this starts by agreeing with them on their gender identity.