Tsumugi dresses as a guy, though it's obvious to anyone she's a girl. But just to clarify, crossdressing isn't her hobby or anything.
Similar to Nene's involuntary sexual arousal, it's the price of her contract which forces her to do so. Wearing girls' clothing causes her to feel sick. This really annoys Tsumugi, because she really likes wearing cute and girly clothing.
She and Nene eventually decide to join forces, and work together as fellow witches.