The correct response would be a gentle discussion about whether other people's genders and gender expressions are actually important to know, and a reminder about manners and some things being private.

Was it really too difficult to say "Sweetheart that's not polite." And drop the subject? (I had more to say but the %]%{#[ ads hijacking to try to make me buy candy crush 12 times as I wrote that much made me forget what it was)

This is the response I'd go with. I understand your daughter is 3 OP, but she should be taught now that it's not always appropriate to openly talk about another person. A simple, quiet response to the child advising that it's not polite to ask such questions so loudly will help her find her own personal filter and apply it when necessary. Still a funny FML though. LOL.

tell her to ask it lol

Should have turned it into a lesson by telling her it doesn't matter, and no matter what she should always be polite and sensitive to others feelings. She's too young to understand, but it's a good starting place, plus you wouldn't have ended up with your foot in your mouth. Haha.

Could have just said, "Don't be rude honey."

lol this one is actually funny

Should have just said, "They're a person just like us, and that's what's important, sweetie!" Then maybe had a talk with her later about how not everyone falls under the 'man' or 'woman' category. You can never start too early with these things; the earlier the better, in my opinion!

Plot twist: It was an alien all along.

haha what did it turn out to be?