Don't know what part of that is confusing. Sten was speaking to a female character who sees themselves as female. Krem is a female who sees herself as male. In Qun terms, while both are biologically female, the warden was a woman in a man's role, Krem is just plain a man.
Krem is not just a tomboy or a macho female warrior, that's what it sounds like OP isn't getting. Krem sees himself as a man, and so that's how 'he' is treated in the Qun. All of that lines up perfectly with what Sten's reaction to the female warriors were, women who see themselves as women taking on what Sten and the Qun saw as a man's role.
I'm confused about why this is causing confusion .-.
EDIT: To address some of the posts above me, two things to consider. One, this is a video game, it's in everyone's best interest to limit application of real-world variables to a fictional one. Using your knowledge of the world to contrast/compare and thus understand the fictional one is one thing, expecting them to simulate one another is however, unhealthy. Two, the whole 'what many trans/gay/whatever' start to conversations is a bad idea. What you are REALLY saying is, "many trans/gay/whatever ~in the society I live in~ do [insert action here]". Every society in the real world (let alone a fictional one) handles queer variables differently. Trans lifestyles, as just one example, existed in many native american cultures and were even venerated as living on the spiritual cusp of gender that allowed them to see the world differently than one who is strictly male/female. They were also left behind during tribal warfare to protect the women and children while 'men' went off to bloody each other up a bit. Then there's the lady-boy culture in parts of Asia, that's it's own thing, and is very different than the way, say, the USA handles trans/cross-dressing men.
I just digressed the hell out of this post but, ya.