I wouldn't blame them for perpetuating those rumours to add to their own mystique. They probably go around wearing footie pyjamas in their own houses (hovels? lairs?).
Oh, god. Uh. It's one of those complicated muggle things, and I'm hardly equipped to explain it properly. Where's Gwen when you n Basically, your genetics are what makes you... you. The color of your hair, your eyes. How tall you are. Maybe even your magical abilities, who knows? Anyway, all of those things are dictated by the genes you inherit from your parents.
Basically it's some complicated muggle stuff that I would have to study for several more years if I wanted to explain it all correctly.