Transitive trust is where you have a parent domain and maybe one or more child domains; these would be called trees. Refer to the diagram:
Between the parent domain and each child domain is two-way transitive trust, where resources can be shared two ways. Because the parent domain trusts both child domains A and B, it can be said that Child A transitively trusts Child B as long as the administrator in Child B wishes to give someone from Child A access to resources and vice versa. Think of a domain as being people from the same company.