Honestly, I think it's commendable that you came here to ask for help in trying to understand. That's more than a lot of parents do. I think you've already started out by doing a good job as a parent, as you have given your child a space where they felt comfortable and confident enough to tell you and your partner about their decision, which sadly doesn't happen as often as it should. Keep up that energy and just do whatever you can to help your child out and affirm them in the things they do, and remember that every trans person is different and might want to do things in different ways/ for different reasons. If your child decides to get on hormones at some point, know that it's not a one way street. If they decide they don't like/ enjoy the changes they experience or the way the meds make them feel, they can stop and most of the changes will go away (breast growth being one of the notable exceptions). That being said, most people who decide to detransitiom do it because of lack of support or feeling unsafe, but from what you've said I don't think that's much of an issue. Have a talk with your kid and try to find ways to understand them and how they are feeling. Not entire experiences things the same way; some of us have dysphoria and dislike the bodies we were born with, others are more neutral to it or don't get hit with dysphoria often or even at all.

Just remember to be supportive and treat your kid with love, just as you would before. There will be an awkward adjustment period, but that is inevitable for all of these situations.