There are probably many others here who can more eloquently explain "freeze transformations", but what follows is hopefully enough to get you started.
If you create an object (ie a Poly sphere), that object is created by default at xyz coordinates 0, 0, 0...that is, in the center of the "world". If you translate (move) that object in X, Y, and/or Z, the distance it moved from 0, 0, 0 will be shown in the channel box. You use "Freeze Transformations" to zero out your translate X/Y/Z, and the object is now at 0,0,0 relative to itself.
The general purpose of freezing transformations is so that objects don't deform or move in funny/undesirable ways when animated. In addition, one freezes transformations on object "a" so that objects "b" and "c" can be more easily placed in relation to object "a"
Usually, you don't freeze transformations until an object is ready to be combined with another, animated, or manipulated (ie bound to a skeleton). Most books and several of the tutorials here cover freezing transformations.
There are instances where you DON'T want to freeze transformations, of course...when in doubt, ask!
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