Virtual network peering seamlessly connects two Azure virtual networks, merging the two virtual networks into one for connectivity purposes. Gateway transit is a peering property that lets one virtual network use the VPN gateway in the peered virtual network for cross-premises or VNet-to-VNet connectivity. The following diagram shows how gateway transit works with virtual network peering.
In the diagram, gateway transit allows the peered virtual networks to use the Azure VPN gateway in Hub-RM. Connectivity available on the VPN gateway, including S2S, P2S, and VNet-to-VNet connections,
Reference:
https://docs.microsoft.com/en-us/azure/vpn-gateway/vpn-gateway-peering-gateway-transit
