In SL it makes sense, you have a character that is a representation of you. In games, you are often playing the story of a particular character. In Assasin's Creed, each one has been the story of an Assassin - Altair, Ezio, Jacob and Evie, etc.. Each GTA game has told the story of a specific character (GTA V had three characters, and did rightfully take criticism for at least one not being female). Tomb Raider has always been Lara Croft's story, etc.
I think there is room for both. Environments where you are making a char that represents you (or is just a character to play the game with), by all means it needs full customization options and support for gender representations beyond the binary as well (seem the Sims 4). It doesn't make sense in all situations, though, but the more diverse games do become, the better.