"Transgender" is an adjective, not a noun - as in, transgender people, or trans woman, or some such. 
Anyway, understanding that you don't understand it is half the battle. Fortunately, there are a lot of good resources out there. The Eugene Public Library has some good ones. I'd recommend "The Riddle of Gender," by Deborah Rudacille; "Whipping Girl," by Julia Serano; "True Selves," by Mildred Brown; "Becoming Nicole," by Amy Ellis Nutt; and "The Psychobiology of Transsexualism and Transgenderism," by Thomas E. Bevan, PhD.
And yeah, the good thing is that the kids feel safe and loved. Let's work together to help "little Luke" and the others in vulnerable situations.