Hi Zuberi
Just like some men feel they are women inside, and vice versa, some don't necessarily feel like the other gender, they just don't feel like the gender that's normally assigned to their body's sex. It's that simple, technically.. but..
Non-binary can indeed be complicated. One thing, for starters, is to recognize that everyone is different, and everyone has different values in regards to their identity. They come in all shapes an sizes!
It sounds like your friend isn't too concerned with outer appearance. For some people it's not such a big deal, it's just a body. What may matter more for 'er self-image is how people treat 'er. If the female gender really doesn't feel like 'er, calling 'er female is like calling someone Jack all the time even though their name is Bob. Or maybe some nickname they don't like. Why do it if they don't find it respectful?
(though honestly it can be hard to always do it, and using 'they' feels weird sometimes. just do your best, i guess

)
It's important to focus on that first, because you can never truly understand what kind of world is inside of your friend (urh, partner, sorry). Your partner's feelings will take a while to understand, as you get to know your partner more and more... as well as just opening up to transgender stuff in general.