First of all, don't confuse translation with transition. The latter is a general English word for "change", whereas to translate in geometry and general math is to "move" or "offset" something.
A transformation matrix defines how to transform, i.e. scale, rotate and translate, an object, usually in a visual manner. By applying a transformation matrix to an object, all pixels of that object are rotated, moved and scaled/interpolated according to the values stored inside the matrix. If you'd rather not think about matrix math, just think of the matrix as a black box which contains a sequence of rotation, scaling, and translation commands.
The translate() method simply offsets the bitmap that you are about to draw a number of pixels in the X and Y dimensions. If you use the default ("identity") matrix, which contains no translation, the top left corner of your object/bitmap will be in the (0,0) position, known as the origin or registration point.
Consider the following matrix:
var mtx : Matrix = new Matrix; // No translation, no scale, no rotation
mtx.translate(100, 0); // translated 100px on X axis
If you use the above matrix with a BitmapData.draw() or Graphics.beginBitmapFill(), that means that the top left corner of the original bitmap should be at (x=100; y=0) in the target coordinate system. Sticking to your Graphics example, lets first consider drawing a rectangle without a matrix transformation.
var shape : Shape = new Shape;
shape.graphics.beginBitmapFill(myBitmap);
shape.graphics.drawRect(0, 0, 200, 200);
This will draw a 200x200 pixels rectangle. Since there is no transformation involved in the drawing method (we're not supplying a transformation matrix), the top left corner of the bitmap is in (x=0; y=0) of the shape coordinate system, i.e. aligned with the top left corner of the rectangle.
Lets look at a similar example using the matrix.
var shape : Shape = new Shape;
shape.graphics.beginBitmapFill(myBitmap, mtx);
shape.graphics.drawRect(0, 0, 200, 200);
This again draws a rectangle that is 200px wide and 200px high. But where inside this rectangle will the top left corner of myBitmap be? The answer is at (x=100, y=0) of the shape coordinate system. This is because the matrix defines such a translation.
But what then will be to the left of (x=100; y=0)? With the above code, the answer is that the bitmap repeats to fill the entire rectangle, and hence you will see the rightmost side of the bitmap, to the left of the leftmost side, as if there was another instance of the bitmap right next to it. If you want to disable the repeating image, set the third attribute of beginBitmapFill() to false:
shape.graphics.beginBitmpFill(myBitmap, mtx, false);
Lets take a look at one last example that might help your understanding. Remember that the translation matrix defines the position of the top left corner of an image, in the coordinate system of the shape. With this in mind, consider the following code, using the same matrix as before.
var shape : Shape = new Shape;
shape.graphics.beginBitmapFill(myBitmap, mtx);
shape.graphics.drawRect(100, 0, 100, 100);
Notice that this will draw the rectangle 100px in on the X axis. Not coincidentally, this is the same translation that we defined in our matrix, and hence the position of the top left corner of the bitmap. So even though repeating is enabled, we will not see a repeating image to the left of our rectangle, because we only start drawing at the point where the bitmap starts.
So the bottom line is, I guess, that you could think of the transform matrix as a series of transformation commands that you apply to your image as you draw it. This will offset, scale and rotate the image as it's drawn.
If you are curious about the inner workings of the matrix, Google transformation matrices, or read up on Linear Algebra!