A friend of mine has a trans gf from Germany so he explained this quite nicely to me today. There are still two relatively peripheral issues. One is that surnames can’t be changed, which is a problem for anyone from a language with gender-marked surnames (e.g. Russian, Ukrainian, Czech). It’s not an acceptable situation neither with regards to gender nor to grammar (masculine name + feminine surname is just… wrong). The other is that apparently when transitioning you have to change your name, which shouldn’t be necessary for those with gender neutral names that they’d prefer to keep.

Still, it’s a big and nice step forward.

masculine name + feminine surname is just… wrong

I don’t quite understand what you mean.
The surname is the family name and is typically not gendered in Germany.