I was hoping that in the 21st century we'd finally get over the need to categorize and label everyone's identity and sexuality and just let people be unique individuals who don't fit into little boxes, but I guess it's still too soon for that.
Eh? When it comes you how you treat people individuals, that ideal makes a lot of sense. However, when talking about broad swaths of people, it helps to have at least somewhat decent ways to subdivide them, both to make it clearer what you're talking about and to allow conversations that are narrower in scope then the whole of humanity and wider in scope than specific individuals.
As a somewhat unfortunate analog, consider ADHD. ADHD sounds relatively simple — Attention Deficit Hyperactivity Disorder, a disorder that makes people hyper and prevents them from paying attention, right? Well, no. Not really. ADHD actually encompasses a pretty broad range of symptoms that include executive dysfunction, time blindness, impulsivity, and difficulty controlling attention. What's more, not everyone who has ADHD will express all of those symptoms or express them in the same way. That means, it's really important to consider an individuals unique mix of symptoms when discussing how the condition effects their life and the what what strategies might help mitigate that. However, being able to discuss ADHD as a whole is also really helpful, since it helps you recognize broader trends or connect with people who have similar experiences.
Other human labels are similar. Most people aren't going to approach gender, sexuality, religion, ethnicity, nationality, or just about anything else through neatly predefined packages. If you really want to deal with any given individual, then you're going to have to do a lot of unpacking. At the same time, there are recognizable trends within various groups that make talking about them as groups helpful. If I say I'm attracted to women, that covers an incredibly broad range of people who will each have different relations to that word, most of whom probably aren't well defined by it, but at the same time it's also pretty clear that I wouldn't be attracted to someone like Macho Man Randy Savage.