Prelim- is an intern (PGY1) in surgury or medicine. These positions are used for individuals who matched into surgery, plastics, derm, radio, neuro, ENT and other non-categorical programs (Categorical means PGY1 is included in the residency program). There are usually open preliminary spots after match day and positions usually go unfilled. If you did not match I would consider prelim a last resort because there is no guarantee you will have a job at the end of your PGY1 year and will have to re-apply for the match while an intern.
Transitional Year- your basically a medical student who can write prescriptions. You will be working on all floors including internal medicine, surgery, OB-GYN, Family Medicine, Pediatrics and possibly more depending on the program you apply to. Its typically meant for students who need another year to decide which speciality they would like to go into. Some residency program offer the transitional year as a substitute for prelim before going into non-categorical fields. In a way transitional years are much more competitive then pre-lim because the hours are typically easier and less demanding.