L.Young defines it the best - Two-Spirit is an identity that encompasses being an Indigenous LGBTQ person -- and so much more. My identity places me at the intersection of the LGBTQ community and Indigenous culture, which is a unique place to be -- with a story rich in honour and complexity.
To be Two Spirit is to navigate gender, but not necessarily transgender experience. Certainly, an Indigenous person of transgender experience may identify as Two Spirit, but Indigenous lesbian, bisexual, and gay individuals may also identify under this broad label. There is also space here for Indigenous genderqueer, gender non-conforming, and other non-binary identified people.
To be Two Spirit is first and foremost to be Indigenous, connected to Native culture and rooted in our Indigenous histories. With the resurgence of traditional Indigenous teachings and cultural reclamation and preservation efforts, Two Spirit identities will also move with us into our futures.
Being Two Spirit means placing oneself within an Indigenous worldview that is altogether different than the colonial European society that has grown up around us. The Indigenous worldview is one that centers on gender expression and identity, not sexual orientation. The labels and concepts simply don’t line up.
Two Spirit is my gender. My Two Spirit identity informs how I interact with other Indigenous folks in a variety of contexts, guides how I engage with the world at large, and most importantly it influences how I experience, and am in relationship, with myself.
The Two Spirit gender construct is one where both masculine and feminine spirits coexist in one being. Each Two Spirit person carries their identity differently; it is experienced and expressed uniquely. If you gathered ten indigenous folks who identify as Two Spirit in a room (which is always awesome!) you would likely get as many interpretations of the term as you had individuals.

@nimkee this is a wonderful explanation. Thank you.

@PalacinkyPDX thank you for this explanation!

Jen - Two Spirit is my actual gender -- not male or female, but an ancient non-binary gender identity uniquely and wholly Indigenous. Before the European invaders hit the shores of the Americas, traditional Indigenous societies from all regions, from all language groups and living all manner of lifestyles (agrarian, hunter-gatherer, etc.) recognized and embraced individuals whose gender did not fall neatly into male or female, masculine or feminine. In fact there was no expectation that individuals should fit this either/or pattern. Indigenous views of gender in those days were broadly visioned, not binary. Sometimes three, four, five, or more genders were recognized in a particular culture, and all were accepted as normal components of the created order.