Opacity works as the name suggest that it would; 0.4 is the equivalent of 40% opacity. So when hovering, the element goes from 40% to 100% opacity, the transition is just there to make the effect smoother.
There doesn't need to be a transition, hence it being commented out in the code you found on srobbin.com. That being said, it is certainly a nicer effect with the transition.
The sidebar is dimmed, keeping focus on the content area. When you mouse over the sidebar, it brightens to a more readable opacity/color.
The code seems to be:
My questions are (1) is that the code, (2) how does it work and (3) will it work in all browsers?
But otherwise, you've got the correct code.
-ms-transition. IE10 will support transitions, and we want to be as future proof as possible.