At that age, it’s just clothing, and at any age, it should be, just clothing. My only concern would be if I were his parent, how would the other kids treat him. Looks to me like the kids acted better than the parents.
A short story of how a boy decided to wear a dress at a party and how the adults reacted to the situation: about as badly as you imagine, and with heaps of gender enforcement directed against both the boy and his parents. But there’s an interesting twist:
Interestingly enough, not a single child said a word about their choice of costumes, other than to compliment Chester on his new dress.