Oops, someone should have replied to the OP, sorry! We also need to update the documentation.
When Local
is checked, the constrained bones' local transform is modified to match the target bone. When unchecked, the the constrained bones' world transform is modified to match the target bone.
When Relative
is checked, the constrained bones' transform is modified by adding the target bone transform (ie the new position is relative to the constrained bone's position before the transform constraint is applied). When unchecked, the the constrained bones' world transform is modified to match the target bone (ie the constrained bone's position before the transform constraint is applied is overwritten).