My confusion comes from the fact we all are a bunch of cells as embryos, during embryonic development, the stem cells become egg or sperm. That's what they do in the lab, they take the stem cell of someone, and turn it into sperm or egg, which is exactly what happens in embryonic development. They are redoing what happened to everyone of us when were were embryos in the lab now, recreating the same situation.

During embryonic development, stem cells become egg or sperm? I think you've got it backwards. Egg + sperm is what leads to embryonic development in the first place. According to Oxford dictionary and all other sources, an embryo is

an unborn or unhatched offspring in the process of development, in particular aa human offspring during the period from approximately the second to the eighth week after fertilization (after which it is usually termed a fetus).

Also, during embryonic development and every other phase of life, all cells have sex chromosomes, and these sex chromosomes have wide-ranging effects.

https://stemcells.nih.gov/info/basics/I.htm

Research on rodent and primate pre-implantation embryonic stem cells shows that

differential expression patterns are established in early embryogenesis, before hormonal influence is unleashed. At the level of pathway analysis, these expression differences integrate distinct networks and are dependent directly or indirectly on the sex chromosome complement. Thus, substantial contributions to sex-related differences occur prior to and possibly upstream of [prior to] gonadal sex determination.

Our datasets from XO ES cell lines are an important platform for understanding the impact of sex chromosome aneuploidies on pre-implantation embryogenesis and lineage determination. They will also contribute to refining the direct and indirect mechanisms by which the sex chromosomes interact with the autosomal component of the genome.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5561606/

This paper - called Sex-Specific Gene Expression Differences Are Evident in Human Embryonic Stem Cells and During In Vitro Differentiation of Human Placental Progenitor Cells - said significant, extensive and surprising amounts of sexual differentiation are evident in human embryonic cells and in the precursors of placental cells at 6-7 days after fertilization, prior to or at the start of embryonic development.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6916123/

[Edited to add: whilst the placenta is often described as an extra organ that a woman develops in order to gestate a pregnancy, all the cells in the placenta actually come from the offspring, not from the mother. Which is why genetic testing, including determining sex, of human offspring can be done early in utero via CVS, which involves snipping off a tiny bit of the part of the placenta known as chorionic villi. Today, the recommended time to do CVS is 11-15 weeks, but I had CVS in 1991 at 8 weeks.]

our results support the role of the sex chromosomes in establishing sex-specific networks early in embryonic development

https://pubmed.ncbi.nlm.nih.gov/28818098/

BTW, apparently amongst scientists who use embryonic stem cells (ESCs), there's a history of widespread bias against researching XX cells as extensively as XY cells, which means that in stem cell research female stem cells are getting the same second-class treatment that female people and our health problems get in all other areas of medicine, science, politics and society:

Female pluripotent stem cells differ from males genetically, epigenetically and functionally (Choi et al., 2017a; Choi et al., 2017b; Ooi et al., 2010; Schulz et al., 2014; Yagi et al., 2017; Zvetkova et al., 2005). Despite this, the vast majority of ESC research has been performed on male lines, leading to a substantial imbalance in our understanding of sex-specific pluripotency.

Gee, you think this might have something to do with the fact that most of these scientists so interested in manipulating and "mastering" stem cells and outwitting "mother nature" are men?

The first confirmed ESC line to be derived was male (Bradley et al., 1984). Subsequently, the ESC lines employed as workhorses cells for the field, E14, R1, J1 and Bruce4, were all male (Hooper et al., 1987; Kontgen et al., 1993; Li et al., 1992; Nagy et al., 1993). Strikingly, all of the 13 karyotyped ESC lines commercially available via the American Type Culture Collection (ATCC) are male. This major imbalance has substantially hindered an understanding of how female and male pluripotency may differ and impeded study of female-specific processes in their native context, including X chromosome inactivation.

Despite, or perhaps because of the uniqueness of female ESCs, they are underrepresented in the literature compared to studies performed on male cells. Given the therapeutic potential of ESCs and iPSCs, it is of paramount importance to remedy this and therefore we created the Xmas ESC system. Through the use of the dual fluorescent X-linked reporter alleles in Xmas ESCs we are able to infer both the karyotype and transcriptional status of the female X chromosomes, being the feature that genetically, molecularly and functionally distinguishes female ESCs from males

https://www.biorxiv.org/content/10.1101/768507v1.full

Also, I should point out that the trend of working with human embryonic cells is becoming passé. Coz in 2006, scientists figured out how to make cells that function as embryonic cells from adult stem cells and which have all the "pluripotent" capacities of embryonic cells. These are known as "induced pluripotent stem cells," or iPS cells. These kinds of stem cells used are preferred by many doing research and experimentation today because they don't raise the ethical issues that working directly with human embryonic cells inevitably lead to. Working with human embryonic cells means manipulating and usually destroying human embryos.

Significantly, iPS cells have been shown to function very differently depending on their sex chromosomes too:

The researchers discovered that female and male cells behave differently... and that this is due to their different number of X chromosomes – two in female cells and one in male cells.

https://www.technologynetworks.com/cell-science/news/lets-talk-about-sex-chromosomes-and-stem-cells-299890

https://www.cell.com/stem-cell-reports/fulltext/S2213-6711(18)30146-2