You can transmute items with the charges you get in-game. When do items begin to be worth transmuting? How do you Transmute and what does it do really?
Transmuting is done for skinning items, grading them up or take special stats from them.
You can transmute things in the arcane transmutor. Many "receipes" can be found in the official Runes Of Magic(ROM) forum or on buffed.de (german). The other things are answered in your further questions already ^^