But I know! The universe doesn't think anything of the sort. It doesn't even think (bits of it do--us, for instance).

There is no inherent masculinity or femininity. It's a very useful specialization because reproductive structures are expensive, and recombination is valuable, but that's as far as it goes.

There are extensive regulatory networks in humans (and mammals, and vertebrates, and most animals) that maintain the specialized structures. There are exceptions: some animals switch sexes (fish especially); some animals are hermaphroditic (e.g. slugs); but these less-common dual specializations still are highly regulated at least at the cellular level: gametes are specialized to be sperm or egg.

So, anyway, the answer is: it's discrete in normal cases.

Biology is built from inexact components, so basically anything goes wrong sometimes. But that doesn't mean there's a 0-1 spectrum of sex itself. There are two stable states each with some variation around.

(None of this means that we should be cruel to people who don't fit near the mean of the two stable states. It just means that biology has two states, and not a meaningful continuum.)