MeadowMist, the premise is pretty simple, but I'll try to break it down in a way that's not too "wordy". LOL
It's based on tracing. So you have your pattern or design on paper. Lay your fabric over it and trace the lines. Without a light source underneath, it's rather hard to see those lines through your fabric. Where fabric is flimsy, you want something sturdy to support your paper and fabric, so that's where the glass comes in.
People use cans, books or such to have something to set the glass onto. It needs to be elevated, since you can't set it directly on a light source (imagine setting your piece of glass directly on a flashlight or lamp...it wouldn't work) Think of it like making a miniature glass table, giving you the space underneath to set your light source.
Another inexpensive method is taping your paper design onto a sunny window and placing your fabric over it and tracing away. That way you are using the sun as your light source.
Make sure you use a washable medium to mark onto your fabric, because your stitching is not necessarily going to cover the lines completely. And note that this method only works on light colored fabrics. To trace onto dark fabrics, you'd need the prick and pounce method.
Here's a great link for embroidery tips. Scroll down the page to "transferring patterns".
http://www.needlenthread.com/tips-techniques
I hope that helps!