Hey,
Let me explain you about transclusion from a senario.
Consider the following code:
controller file
<body ng-app="app">
         <div ng-controller='emp'>
                  This is a message from controller
                   <div message>
                              This is inner message
                    </div>
         </div>
</body>
From above it is clear that there is only one controller named emp and directive named message in it.
Now let us define the directive message
message Directive
app.directive("message",function(){
            return{
                       templateUrl:'into.html'
                     }
});
Here, message directive contain the file named into_html which is having some content in it. Let the file into_html is defined as under:
into.html
<div>
     This is template context
</div>
This into.html content is injected to controller file in respective message directive. Finally the output file can be consider as follow:
 Final controller file
<body ng-app="app">
         <div ng-controller='emp'>
                  This is a message from controller
                   <div message>
                              This is template context
                    </div>
         </div>
</body>
 Here, you  should notice that in final controller file has replaced the message directive context  "This is inner message" with info.html context.
For your reference follow the image attached below:

So if the final controller file contain both hidden as well as the template context in it ,that is know as transclusion.
final transclusion controller file.
<body ng-app="app">
         <div ng-controller='emp'>
                  This is a message from controller
                   <div message>
                             This is inner message
                             
                              <div>
                              This is template context
                              </div>                                
                    </div>
         </div>
</body>
If you want to know how transclusion is achieve refer this- Achieve_Transclusion