A lot of major changes took place in the 1960s and early 1970s but one large group was left without a word that could properly describe its lifestyle.
This nameless group were heterosexual males that liked to wear clothes that were traditionally worn by women, and they didn't at all like the word transvestism.
So they coined the word cross-dressers feeling that it far better described men that were mostly non-fetishistic, and simply enjoyed wearing women's clothes and makeup.
This group did, and often still does try to distance itself from gay men and transsexuals, but much of the public still refers to them as transvestites rather than cross-dressers.
The bible itself mentions the transvestist phenomenon in Deuteronomy 22:5 but the word itself was not coined until around 1910.