Yes this Hadith seems to be concerning genetics. The Arabic terms literally mean ‘water/liquid/fluid of the father’ and ‘water/liquid/fluid of the mother’. The immediate audience was not familiar with the concept of genes. In 7th century Arabia, an over-arching term like that is understandable in that it carries the meaning of genes in everyday understandable language.
وَأَمَّا الْوَلَدُ، فَإِذَا سَبَقَ مَاءُ الرَّجُلِ مَاءَ الْمَرْأَةِ نَزَعَ الْوَلَدَ، وَإِذَا سَبَقَ مَاءُ الْمَرْأَةِ مَاءَ الرَّجُلِ نَزَعَتِ الْوَلَدَ
Above is the part of the Hadith we are focussing on, translated; as for the child, if the fluid of the man SABAQA (beats) the fluid of the woman then the child resembles the man. And if the woman’s fluid SABAQA (beats) the man’s fluid then the child resembles the mother.
If a child is to have a phenotype of one of his/her parents then it means the genes of that parent SABAQA (beat) the other parent as in a competition. Both parents have genes which compete against one another. Remarkably, the word SABAQA does have the connotation of winning a competition.
Gene versions can be dominant, recessive and co-dominant. We must also remember that for most observable physical characteristics there’s more than one set of genes at play (multiple genes) – this is an area in which geneticists have little understanding (such as nose shape). So for a child to share a trait from the father or mother it’s literally a case of whose genes beat the other.
One thing that is of interest for the seekers of truth, the Prophet (p) made a statement which is in conformity with our modern day understanding of genetics, namely if a child is to share a particular phenotype with the mother it means the mother’s genes ‘beat’ the father’s genes in that instance (the same applies vice versa). Looking at the overall picture, if the child resembles one parent more than the other it means that parent’s genes won or beat the other parents genes.
When the news of the arrival of the Prophet at Medina reached `Abdullah bin Salam, he went to him to ask him about certain things, He said, “I am going to ask you about three things which only a Prophet can answer: What is the first sign of The Hour? What is the first food which the people of Paradise will eat? Why does a child attract the similarity to his father or to his mother?” The Prophet replied, “Gabriel has just now informed me of that.” Ibn Salam said, “He (i.e. Gabriel) is the enemy of the Jews amongst the angels. The Prophet said, “As for the first sign of The Hour, it will be a fire that will collect the people from the East to the West. As for the first meal which the people of Paradise will eat, it will be the caudate (extra) lobe of the fish-liver. As for the child, if the man’s discharge proceeds the woman’s discharge, the child attracts the similarity to the man, and if the woman’s discharge proceeds the man’s, then the child attracts the similarity to the woman.” On this, `Abdullah bin Salam said, “I testify that None has the right to be worshipped except Allah, and that you are the Apostle of Allah.” and added, “O Allah’s Apostle! Jews invent such lies as make one astonished, so please ask them about me before they know about my conversion to I slam . ” The Jews came, and the Prophet said, “What kind of man is `Abdullah bin Salam among you?” They replied, “The best of us and the son of the best of us and the most superior among us, and the son of the most superior among us. “The Prophet said, “What would you think if `Abdullah bin Salam should embrace Islam?” They said, “May Allah protect him from that.” The Prophet repeated his question and they gave the same answer. Then `Abdullah came out to them and said, “I testify that None has the right to be worshipped except Allah and that Muhammad is the Apostle of Allah!” On this, the Jews said, “He is the most wicked among us and the son of the most wicked among us.” So they degraded him. On this, he (i.e. `Abdullah bin Salam) said, “It is this that I was afraid of, O Allah’s Apostle.