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My understanding is that if the athlete is correctly undergoing Hormone Replacement Therapy (HRT) the biological advantage is significantly reduced if not removed. I am sure there are exceptions though.
Edit: Everything below
After looking through some studies it seems like Trans fem athletes do maintain some advantage, or atleast the current wait time is not enough for the edge to be eliminated.
Best example I could find https://www.bmj.com/company/newsroom/current-treatment-period-may-be-too-short-to-remove-competitive-advantage-of-transgender-athletes/
I mean, the question is what's fair both to trans women and cis women. Competing against competitors with an advantage and being excluded are both unfair. Absolutely eliminating advantage isn't the standard that minimizes unfairness, it's a balancing act between competing interests.
I'm not sure sports have found exactly the perfect balance, and it may vary a bit by sport, but it doesn't seem to be wildly off in favor of trans women.