Put simply, a transcode is any audio file that wasn't encoded from an original lossless source, such as a retail CD (not created from lossy files) or a properly made lossless rip. At What, we only allow one lossy step in the lineage of any upload.
Why is transcoding bad?
Whenever you encode a file to a lossy format (such as mp3, m4a(AAC), ogg, or mpc) information is permanently lost. It doesn't matter what you do, it's impossible to get this information back without making a new rip from the original lossless source. If you reencode it to a different format or bitrate, all you're doing is reducing the quality. This applies to any lossy to lossy conversion, so even if you convert from 320kbps to 192kbps, the final file will still sound worse than if you had just ripped to 192kbps in the first place.
It's also important to remember to verify that lossless rips actually came from an original source. People that download lossless expect it to be identical to the original. There's no point in people downloading a bigger file just to get another lossy rip.
So how do I verify that my upload isn't a transcode?
The simplest way is to rip and encode it from the original source yourself. That way, you know that there has been only one lossy step (or that the rip is truly lossless, if you decided to do a lossless rip).
You should also check it by using a wave editor (such as Adobe Audition) to look at the spectral frequency display.