The terms become obsolete, convey the wrong meaning or just become offensive.
Transsexual, for example, is a word that has dropped out of favor, and I suspect that many view it as offensive. The problem is that it sexualizes the transgender experience and perpetuates the incorrect notion that transition is about sex. We know that it is NOT about sex; it is about gender identity. However, those who are stuck in the binary gender identity notion don’t understand this. They think everything has to do with sex and that is just not correct.
Transvestite is an interesting term. While it has fallen out of favor here and is thought to be offensive, it still continues in the UK. As a matter of fact, Susie Eddie Izzard self describes sometimes as an Executive Transvestite in various comedy routines. Technically the meaning of the term has not chanced, but it is just not used.
However, we are not inventing words. For example, the term gender fluid comes from 2 words with long standing histories. Think of it as shorthand. You could say that someone’s perspective on gender varies periodically, or you could just say gender fluid.
A while back I counted the words that described how I looked at things and it came to 27-28 words or I could just say transgender non-binary woman. From the GLAAD list, a quick scan shows that either there were terms that had long histories or had medical origins such as dysphoria or Latin prefixes such as cis-.
Marg has noted that she is intersex. People used to use the term hermaphrodite. Merriam-Webster says:
an animal or plant having both male and female reproductive organs, structures, or tissue
However, What we now know it that this definition is incorrect. External and internal characteristics can be in alignment, but the differences can be seen at the chromosomal level and you would not know that except for medical tests.