This dialog is available in the font and outline views. In the font view it applies to all selected characters. In the outline view if there is a selection then it applies to that. if there is no selection then it applies to the entire character.
You may choose whether you want the transformation to be centered at the character's origin, the center of the selection (or of the character as a whole if there is no selection), or the location of the last point on which you clicked the mouse.
You may apply several different transformations at once:
If you are in the font view, and if Copy From is set to all fonts, then the transformation will also be applied to the bitmaps. Not all of these transforms can be mapped to ones on the bitmap font (arbitrary rotations, scales, etc. do not map). Only rotations by 90 degrees, flips, skews and moves will be approximated on the bitmap characters.
If you are in the font view or the outline view and there is no selection (and you are in the foreground) there is a "[] Transform Background Too" check box. If you check this then anything in the background will be transformed with the foreground.
Transformations in the Outline character view are not applied to any bitmaps. (Nor are transformations in the bitmap window mapped back to the outline).