There's no question that Hollywood has a history of misrepresenting trans people. Take the film Silence Of the Lambs, in which transgender Buffalo Bill (Ted Levine) skins women in order to wear their bodies as "suits," or the television series Nip/Tuck, which depicts a trans woman as a manipulative predator. There are countless examples of trans people being portrayed as psychopathic villains, but even comedies are guilty of treating trans people terribly: How many times have you seen a joke be made at the expense of a trans person in a blockbuster comedy? (The film Ace Ventura: Pet Detective even shows Jim Carrey's titular character burning his clothes after learning that he has kissed a trans woman.)
Accurate representation is important, not only because trans people exist and deserve to be seen, but because the trans community is already dealing with bigotry in the real world as it is. Trans students are no longer protected in their own school bathrooms. Trans people are consistently targeted by conservative lawmakers as sexual criminals despite the fact that they are actually more likely to be murdered or assaulted than their cisgender peers. Media plays a role in how the trans community is seen: If we can normalize trans people in our media, perhaps we can teach the world how to treat this marginalized group better.
Hollywood has made strides in recent years in how it depicts trans people onscreen. Laverne Cox, herself a trans woman, became the first transgender person to be nominated for an acting Emmy for her portrayal of Sophia on Orange Is The New Black. Though Jeffrey Tambor is a cisgender man, his nuanced portrayal of Transparent character Maura, a trans woman navigating her "new life" has received acclaim. (Several trans people do portray trans characters on the series as well.)
Of course, there's still a long way to go. Check out this video about transgender representation in media below: