What is the transparencyd daemon for?
It handles the API and SDK calls for developers to check user tracking entitlements and transparently request access to private data and set these preferences on a per-app and per-device basis.

https://developer.apple.com/documentation/apptrackingtransparency

Since 2010, Apple publicly has maintained that all privacy and tracking should be after we consent to what / how and when out data is accessed.

https://daringfireball.net/linked/2020/12/18/steve-jobs-on-privacy

There’s a lot of public angst now that the code has shipped and is being enforced - not everyone is a fan of informed consent and opting in to tracking or “transparency”.

https://daringfireball.net/linked/2020/12/18/swisher-facebook-apple
https://www.eff.org/deeplinks/2020/12/facebooks-laughable-campaign-against-apple-really-against-users-and-small

But to address your question, it’s the mechanism by which an application receives access to photos, contacts, files and other things by requesting that access from the operating system.