From AMS Glossary
(Abbreviation for identification: friend or foe.) A system of transponders carried by an aircraft that makes it possible to locate and identify the aircraft by radar.
Although the system was originally developed for military uses, it has also been used in nonmilitary applications for tracking aircraft on radar displays. When a radar signal is detected by the transponder on the aircraft, the transponder sends back a coded message that is detected by the radar. The radar then plots on its display (usually a PPI) an indication of both the location and the identity (coded) of the aircraft.