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A transit VLAN would be a VLAN transporting transit traffic, in other words, traffic that does not have the final source or destination on that VLAN.
For example, assume you have four routers that you want to directly peer with each other. One method to do this would be to have each router have a point-to-point link to each other router, a full mesh. Another method would be to have all four routers connect a single interface to a hub or switch in the same L2 LAN. All four router interfaces would each have an IP address within the same subnet. As these routers forward traffic to and from each other, this transit traffic crosses the shared LAN.
Instead of using physical hubs or switches to support a physical L2 LAN, you can logically do the same with a VLAN. From the routers perspective, they each have an interface connected to the common L2 VLAN which continues to allow them to pass transit traffic between themselves.
PS:
Actual implementations can sometimes be a bit confusing on modern L3 switches which are supporting the VLAN, physical connections and routing.
