I’ll summarize:
The contest organizers don’t accept trans women (AKA assigned male at birth, transitioned to female)
This means that they are being transphobic, they aren’t accepting trans women as women.
The person in the article is the opposite, assigned female at birth and transitioned to male. AKA a trans male.
This person is considered a woman by the beauty contest.
He entered the beauty contest as a form of protest in and to bring attention to the blatant transphobia.