Named transitions are an addon to the workflow module so specific workflow transitions can have their own labels which the admin can describe relative to the beginning and ending states. With named transitions, the workflow state options can be state aware. Rather than showing the user a workflow box containing options like "review required" as a state in the workflow, it could say "move to the editing department for grammar review". That means your workflow options can show text as an action representing the flow of the workflow action as opposed to a state name.

There is a Workflow issue related to this feature: #73412: Add named, labeled transitions
Depending on your version of workflow, #433500: hook_form_alter() doesn't set name of workflow anymore might prevent the labels from showing on node edit forms.

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