It’s a non-binary so neither male nor female aligned and it’s basically not something someone who is not of the tribes where it’s a thing can use the label. So that’s basically the cliff notes.

To get more granular it’s a partially ceremonial category of gender that is neither male nor female. Culturally this third gender has unique cultural and social roles similar to how male and female do that are unique to that culture. It’s a social category that has it’s own modes of dress, rituals and social expectations applied to it. Western culture doesn’t exactly have a rigid third gender classification in this way so there’s not much that two Spirit can be easily compared one to one with making it difficult to explain. Two Spirit people are sort of formally recognized by their people and assume the cultural trappings of this third gender role.

It’s not linked to a specific tribe and is kind of an umbrella term, these third gender roles are a feature of a lot of different tribes that all call them something specific in their own languages so “two spirit” is just an English speaker’s short cut to referring non-specifically to a person occupying one of potentially dozen different varieties of these different culture’s third gender categories.