Transmission fluid acts as both a lubricant and coolant for transmission parts. It is vital to the proper functioning of the transmission system. The document outlines 5 steps for changing transmission fluid: 1) warm up the car, 2) check and add fluid if low, 3) drain old fluid and replace filter, 4) replace pan gasket and reinstall pan, 5) refill with fluid and check level. Regular fluid changes are important for transmission maintenance.