Transformations are different forms that your character can take! These forms vary between species, although there are a few transformations that can be used on any character (such as for alternate outfits). A transformation will show up as a seperate tab on a character, so that you can always keep all forms in one place! A good example for that is this character, which is a lopilu having both a humanoid main form and a feral form.
The Cost
Some species transformations are free to use at any time, whereas others will need you to work towards them by completing prompts & collecting transformation items. Other than that, you will most likely need to provide art of the new form.
Transformation Prompts
For the transformations that need some work put into them, it'll be easiest to first check out their requirements on the transformation page. You can search for transformations by species there! Each will tell you the Requirements. For example, the Ascended Lopilu will need three items on a character to be unlocked: Proof of Endurance, Proof of Magic, Blessing of the Founder.
Unless a character has these three items in their inventory, you will be unable to select the transformation. So, let's complete some prompts to get those items! You will want to visit the prompt page and navigate to transformation prompts. Again, you may filter by species here. You'll see that for the example above, there is one prompt per item that needs completion. These are character based prompts. As such, it is important to complete them with the character that you want to unlock the transformation for. That's because when the prompt is approved, the item goes straight to the character's inventory and cannot be removed. Once you collected all items, you will want to make the transformation official...
Make it official
Step one is, of course, creating the artwork of your character in their new fancy transformation. Once that is done, you will send it in as a design update request. This can be done by viewing your character's page > edit > update design. When uploading the new art, make sure to select the transformation it is for! You don't necessarily need to add your characters traits again as they are always pulled from the currently active image (the one from the tab that shows first when you look at your character).
Submit the request & wait for approval...and you are done!
Exclusive Rewards
For the first time you complete a complex transformation prompt series (more than one prompt needed), you may earn a special Award and sometimes even rare items + currency! Make sure to be on the lookout for such prompts, they are listed alongside the rest of the transformation prompts and will usually ask you to show off & send in your newly created form!