A lot of people reading this will wonder if a culture like Daruny is even possible. After all, the readers come from cultures in which gender is defined by biological sex, to the point where intersexed babies are surgically altered to look male or female without the parents' consent. But there have been many cultures throughout history that accepted transgendered people.
Many Native American tribes (at least 120!), as well as many tribal cultures around the world, recognize the existence of more than two genders, such as the Zuņi male-bodied La'mana, the Lakota male-bodied winkte, and the Mohave male-bodied alyhaa and female-bodied hwamee. Such people used to be called "berdache," but now the preferred name is "Two-Spirit." They could live fully in their chosen gender role, even though they were thought of as a third gender. In Mexico, the Zapotec culture includes a third gender called the Muxe. For more cultures like this around the world, see Other Words for the Other-gendered.
In Thailand, a feminine boy is raised a girl and grows up to be a male-to-female transsexual. Such people are called kathoey and make no attempt to hide who and what they are, because they are accepted socially as women. (This doesn't mean they're as socially accepted as Americans think.) Similar people exist in Samoa and are called fa'afafine. In Iran, thanks to Ayatollah Khomeini, transgendered people are officially recognized; they are expected to undergo sex reassignment surgery. (However, 80% of those who get the surgery are actually homosexuals who do this to escape persecution, and even among the rest, only a few remain healthy after the surgery because it's so carelessly done. Read all about it here.)
The ancient Greeks recognized the existence of transgendered people. Funk & Wagnall's Standard Dictionary of Folklore, Mythology, and Legend has a Greek myth in which the goddess Venus Castina was assigned the task of responding with sympathy and understanding to the yearning of female souls locked in male bodies.
According to Gender Outlaw by Kate Bornstein, the Navajo had an interesting way of determining a child's gender:
When the gender of a child was in question in some Navajo tribes, they reached a decision by putting a child inside a tipi with loom and a bow and arrow--female and male implements, respectively. They set fire to the tipi, and whatever the child grabbed as he/she ran out determined the child's gender. It was perfectly natural to these Navajo that the child had some say in determining its own gender.
The Marsh Arabs were the same way.
In ancient Rome, there were boys who had themselves castrated and then lived as girls from then on, and could even marry men; similar people existed in Medina (the burial place of Muhammad, the prophet of Islam; it's interesting to note that while the modern Muslim world is intolerant of transgendered people, they were tolerated by early Muslim scholars). The Hijras in India are a modern example of this. Over 3,000 years ago, Chinese apothecaries distilled female hormones from pregnant mare urine (which is what Premarin is made of) for treating patients, some of whom were transsexuals; this is still done in rural areas. According to the book "Everyday Life in Ancient Mesopotamia" by Jean Bottero, some "men" in ancient Sumer wore women's clothing and took women's names, and "...if we can believe an astonishing oracular text -- playing the part of wives and even mothers." (No real-world country today tolerates transgendered people to that extent, not even Thailand or Samoa.) Even today, in some parts of the Balkan area, if a woman swears in front of 12 witnesses that she will remain a virgin, she can live as a man and be treated as any other men.
In all these cultures, gender is more or less, as Kate Bornstein put it, "safe, sane, and consensual."
It seems that things are starting to change in some Western countries. Check out this site about kids in the Netherlands. This site shows seven "boys" who are allowed to become girls before they start puberty, and they get to take hormones so that their bodies will develop the way those of teenage girls do. Also check out this page about 13-year-old Nicole Roukema, born Niels Roukema. ('Volkskrant' magazine article "Wrong Body" by Ellen de Visser, September 13, 2003)
Helen Boyd, author of My Husband Betty and She's Not The Man I Married, has made a really good analogy. Biological sex is like a bill passed through Congress that needs only the president's signature to become law. Gender identity is whether or not the president signs this bill into law or vetoes it. (To extend the analogy, most modern cultures do their best to override any veto, sometimes going so far as to kill people who are brave enough to openly declare that they have vetoed their birth sex.)
Daruny is just my overactive imagination transplanting this concept to a modern Western country.