Transcoding (verb) a file means converting from one format to another. A transcode (noun) can mean any converted file, but is usually used in a negative context (as in a bad transcode).
A good transcode means that during the transcode process, the file has either never been converted to lossy, or the file has only been converted to lossy once during the last step.
Examples of good transcodes:
A bad transcode means that during the transcode process, the file has either been converted to a lossy format more than once, or the file has been converted from lossy to lossless. Bad transcodes are prohibited on RED.
Examples of bad transcodes: