Rachel some of us use it to indicate that we are including all identities that come under the umbrella term of transgender i.e. transsexual, transgender, trans woman, trans man & so on. For brevity I usually write trans*, I add the the asterisk (*) to indicate that I am including ALL transgender identities in the particular context.
Response to How Transphobic Are You?:
Spam Of God, a drag queen is only a trans*woman if ‘they’ identify as such. My experience has been that drag queens are usually gay men, not transgender. A person is not transgender because of how they dress, they are transgender because of how they experience their gender. If we were to follow your logic, anybody who dresses in attire intended for a binary opposite sex/gender would be transgender. Additionally ‘drag’ refers to the act of parodying a binary sex/gender - not identifying as such. Therefore a trans* person can deliberately present in ‘drag’ but presenting in drag does not mean the person is by default transgender.