In the physical sciences, specifically in optics, a transparent physical object is one that can be seen through. The sense of the word used here began as a metaphorical extension of that meaning.
In sociology, politics, ethics, law, economics, business, management, etc., transparency is the opposite of privacy; an activity is transparent if all information about it is freely available. Thus when courts of law admit the public, when fluctuating prices in financial markets are published in newspapers, those processes are transparent; when military authorities classify their plans as secret, transparency is absent. This can be seen as either positive or negative; positive, because it can increase national security, negative, because it can lead to secrecy and even a military dictatorship.
Some organisations and networks, for example, Wikipedia, the GNU/Linux community and Indymedia, insist that not only the ordinary information of interest to the community is made freely available, but that all (or nearly all) meta-levels of organising and decision-making are themselves also published. This is known as radical transparency.
Transparency, as used in the humanities, implies openness, communication, and accountability.
When liberal democracies, like USA or the Philippines, are developing their democracy one step further transparency is introduced as a means of holding public officials accountable and fighting corruption.
When government meetings are open to the press and the public, when budgets and financial statements may be reviewed by anyone, when laws, rules and decisions are open to discussion, they are seen as transparent and there is less opportunity for the authorities to abuse the system in their own interest.