I'm glad they're tightening up the rules... but no amount of hormone therapy is going to change a male physique into a female one. And even after years of hormone therapy, transwomen still retain a significant male advantage in athletics.
Puberty blockers reduce that difference significantly, as I understand.
So... sort of? Maybe?
Bear with me, this is going to get a little long.
Puberty blockers work by suppressing sex-specific hormone production. They are colloquially called "puberty blockers" because they have been FDA approved and used to treat precocious puberty. Puberty in humans is a multi-part system. There are two major components: pituitary driven and adrenal driven.
The adrenal gland is responsible for the lengthening of the long bones, development of fine body hair and fine pubic hair. Toward the end of the pubertal window, the adrenal is also responsible for closing the growth plates. The adrenal triggers multiple times in a child's life, it's predominantly responsible for "growth spurts". But the largest and longest occurs during the pubertal window.
The pituitary gland is responsible for the production of sex hormones and also prompts the development of secondary sex characteristics. In males it drives the descent of the testes, lengthening of the penis, deepening voice, production of active sperm, increased muscle density throughout the body, growth of facial and chest hair, and significant thickening of arm and leg hair. In females it drives the development of lactation glands and increase of fat deposits in breast tissue, widening and tilting of the pubic bone, and the onset of menarche. In both males and females it drives thickening of the pubic hair and importantly - accretion of density in the bones.
In cases of precocious puberty, the pituitary process triggers too soon, well before the adrenal process triggers. Doctors use blockers to halt that precocious puberty, then let it resume when the adrenal process starts. It's important that the two processes happen in sync, because they work together.
When it comes to using blockers to interrupt a normally occurring puberty, however, there are some problems. First off is that puberty is a time-bound process. While the specific ages vary from person to person, it normally happens within a particular window, and in specific phases. You can look into Tanner Stages if you want to. The key point here is that there are distinct phases of development, that differ for each sex. The really screwy part here is that there's a window of time during which this can occur. If normal puberty is artificially delayed, the entirety of the window doesn't increase, it just moves the start date, not the end date.
This means that while blockers are useful for precocious puberty, they present a risk in a normal puberty. For example, let's say that the normal pubertal range is from age 12 to age 15 (yes, there are some lingering maturation after that, but the overwhelming majority of physical changes occurs in this time, and several of the remaining elements aren't directly tied to the pituitary process). In someone with precocious puberty, perhaps those changes start at age 8. That's a problem, for two reasons. First is that the adrenal isn't doing it's thing, so stuff is out of whack - it's not good to accrete bone density when the bones aren't actively lengthening. Secondly is that the process won't stop until around 15. So instead of 3 years of intense pubertal changes, there are 7. With a normal puberty, however, delaying the process reduces the stages of development that the child goes through. If used for too long, it can effectively eliminate puberty altogether... which is very bad. For an idea of the problems that an absent puberty can cause, look into Kallman Syndrome.
When a transgender child is given puberty blockers, they're being prevented from attaining full maturation. The effects can vary from permanently low bone density, to sterility, to cognitive impacts, and several others.
Applying a hormone suppressant and cross-sex hormones does NOT cause a child to have the "other" puberty. Testosterone in a female will prompt facial and leg hair, increased muscle mass, and accretion of bone density... but it will NOT cause a penis and testicles to appear out of thin air, nor will that female child ever have nocturnal ejaculations. Additionally, the testosterone substitution during puberty prevents the uterus from enlarging to an adult size, prevents the maturation of lactation glands, and depending on the timing it can prevent the pelvis from shifting to a mature position. In a male, substitution of estrogen will cause fat deposits to occur in more female-typical locations (hips and butt, and breast area), but it doesn't create additional lactation glands out of nothing, nor will it make a penis and testes go away. Look into what happened with Jazz Jennings for additional information - that poor child didn't develop a female body, but also didn't develop an adult male body, they were locked into a child's body, complete with a child-sized penis that was too small to create a neovagina from, as well as a permanent inability to experience sexual pleasure.
Circling back to the specific comment: Do puberty blockers reduce the difference in physicality between males and females?
Sort of, but not completely. Blockers don't necessarily result in a child attaining less height. A male child that would normally end up being 6 feet tall is still going to experience the lengthening of the long bones that will get them to that height. If they don't reach full height, it's probably due to low bone density. Blockers don't change the shape of the pelvis - which means they don't affect the difference in gait between males and females, they don't change the different angle of the femur or how it attaches to the pelvis. Blockers don't change the attachment points of ligaments and tendons throughout the shoulders. They won't reduce the size of a male heart, nor will they reduce the volume of male lungs.
Blockers used during puberty will reduce muscle mass... but only so long as some form of suppressant continues to be used. As soon as a male begins to experience the normal production of testosterone, they'll gain muscle density to more male-normal levels.
A male child who is given puberty blockers follow by testosterone suppressants and exogenous estrogen will not end up having the physicality of a typical female. They'll have a male stature, with male structures, male organs... and they'll just be weaker than most males and have lower muscle density.
An underdeveloped male is still not a female.