Transition refers to the process of changing your body to more closely match your gender identity. The most commonly known ones are Female-to-Male and Male-to-Female, but people are starting to transition to non-binary identities as well.
Transition can involve surgery and hormones, but you are not required to do everything. Some people are content only to take hormones, some choose specific surgeries, and some get all the surgeries available as well as hormone treatments. Most places have specific laws about what you need to do to be able to change your gender marker on legal documents, which can be taken into consideration when people are planning their transition.