Given all the missions ninja are assigned to - battle, intelligence gathering, diversions - this is a priceless ninjutsu. It is typically used to change into people other than oneself, but one also has the ability to change into animals, plants, and even inanimate objects like weapons. This gives this technique an abundance of uses. The transformation of a skilled shinobi will be exactly like the genuine article, so it will be impossible to tell the two apart. On the other hand, a transformation performed by an inexperienced person will have obvious discrepancies. It will be impossible to deceive anyone with it. This is one of the most basic ninjutsu, as such most shinobi know how to perform it.
The transformation technique is considered to be among the more difficult E-ranked techniques, since it requires constant emission of chakra while mentally maintaining the form. On top of that, the user would be, most likely, interacting with the environment. This puts mental strain on an inexperienced ninja. Thus the best way to determine if it is indeed a transformation is to cause this strain upon the user; though this is of course not always successful.
Tsunade of the Sannin possesses a more advanced version of the Transformation Technique, where she disguises her 50-year-old self to appear younger. Her technique is unique as it seems to be permanent, and she does not need to exert herself to maintain it for a long time, whereas a normal transformation would be dispelled when the user is injured or attacked. The only time this is broken is when Tsunade releases all the chakra from the seal on her forehead.