Use case

As seen in e.g. issue #27587, many developers are confused about hit testing not working as expected when using Transform.

Take for example the following:

void main() {
  runApp(MyApp());
}

class MyApp extends StatelessWidget {
  @override
  Widget build(BuildContext context) {
    return MaterialApp(
      theme: ThemeData.dark(),
      home: Scaffold(
        body: Center(
          child: Container(
            width: 100,
            height: 100,
            color: Colors.yellow,
            child: Transform.translate(
              offset: Offset(50, 50),
              transformHitTests: true,
              child: GestureDetector(
                onTap: () => print("hit"),
                child: Container(
                  height: 100,
                  width: 100,
                  color: Colors.blue.withAlpha(125),
                ),
              ),
            ),
          ),
        ),
      ),
    );
  }
}

Hitting the overlapping area will work as expected, but hitting the overhanging area of the blue square will not result in a hit.
This happens since the parent can not register a hit outside its bounds and therefore does not inform its children.

transformHitTests description reads a little confusing in that regard:

/// Whether to apply the transformation when performing hit tests.

Which seems to suggest that the hit area will be transformed along with the widget.

The actual role of transformHitTests is to transform the coordinates of hits that the parent does register to the coordinate system of the child.
(See #32192)

Proposal

Changing the description might clear up some confusion and hint to the reason why hits outside the parent can not be registered.
It might also be a good place to hint to the prefered usage of Overlay as mentioned here

Possible alternative description:

/// Whether to transform registered hits into the childs resulting coordinate system.
/// Hits can only be registered if they are within the bounds of the parent.
///
/// Consider increasing the bounds of the parent to fit the childs new position.
/// Alternatively consider placing the child using `Overlay` instead.

Or something along those lines.
Potentially reference RenderBox hitTestChildren as well?