Continuity mistake: In the scene where Dean uses the silver knife to cut his arm to prove he is not a shape shifter, a few moments later Dean is showing Bobby the hand print on his arm, and the cut is miraculously gone. (00:13:00 - 00:15:00)
Continuity mistake: When Sam approaches Pamela to give her a hug, you see his hand on her arm. In the next shot he is still walking towards to her and his arm is hanging at his side.
Continuity mistake: In this episode, Dean says he was born in 1979. In the first two seasons, in the flashback to their mother dying, that's in 1983 which would make Dean 4 years old. He's definitely not 4 years old in the flashbacks.
Answer: Angels themselves may not have genitalia, but their vessels do. Nephilim occur when an angel in a vessel reproduces.
Greg Dwyer