Thanks for the feedback! It’s possible that I haven’t used quite the right terms, so I’ll try to expand on what I mean.
First, I thought the word that was bothering you was going to be the slightly vague “baby” — strictly speaking, this isn’t an embryo at this point, but a fetus. You are quite right that the environment of a fetus is the uterus, and when I say “prenatal environment” I mean what is more technically called the intrauterine environment, or fetal environment (see here). This includes the amniotic fluid, placenta, and the blood that arrives through the umbilical cord.
The idea is that, although the changes ultimately happen in the fetus, they are possibly triggered by these outside factors (such as testosterone levels in the mother’s blood). Calling this an “environmental” effect mainly distinguishes it from genetic issues that don’t have an external trigger/influence. (That said, there’s often an overlap between environmental and genetic factors, so it’s not so simple.)