The Transformation skill is a special skill that the Hermit class starts with. It is special simply because it is not trainable or raisable and only the Hermit (and subsequent evolutions) can use it.
The skill is very similar to the disguise skill that other classes get except it lets the Hermit transform into one of the Jurassic Wars races. Along with special transformation bonus.
Unlocking Transformations
To use transformations you must first unlock them, to do this you must take a trip to Juratania.
Travel to 38, 8 and enter the Druid Grotto and then take one of the portals inside (not the Dark grotto one) to travel to Trenius Mosshide he has a number of trophy quests that need to be completed.
All of the trophy quests involve items from the expansion pack and they may take a couple of hours to gather if you plan on getting them through good old fashioned hard work.
When you turn in the trophy quest you will unlock a transformation.
Skill Use
After completing the above step to unlock a transformation you can use the transformation by opening the Character > Info screen and clicking the transform button at the bottom.
This will show the Transformation screen which will then let you pick which of your unlocked transformations you wish to use. Once transformed you will change appearance and will gain a bonus effect.
To remove the transformation go to Character > Info and click the remove button.