A more thorough explanation:

A transferable vote is a preferential vote that migrates or "transfers" away from a candidate whom it will no longer help. Under transferable voting, a candidate wins if his or her first-choice votes reach the number needed to win, or the "threshold." If no candidate reaches the threshold, the least-preferred candidate is dropped and his or her votes transfer to the next-preferred candidate on each ballot. If a candidate reaches the threshold with an excess, that excess still transfers among the surviving candidates. Each transfer preserves each vote as long as at least one candidate that the voter ranked survives. The redistribution continues until enough candidates reach the threshold or the number of surviving candidates equals the number of representatives still to be elected.

For example, in an election with five candidates and three seats, a voter ranks the candidates in order of preference. If the first-choice candidate does not reach the threshold, the vote transfers to the second-choice candidate, and so on until a candidate reaches the threshold or all candidates are eliminated.