Transvestite is a person who wears the clothing of another gender, and adopts the mannerisms of that gender, in an effort to appear as much as possible as a member of the opposite sex.
Many people confuse transvestism with cross-dressing. The main difference is that cross-dressers usually only wear the clothing of another sex, and not emulate the other sex or attempt to pass as a person of another gender.
Likewise, many confuse being a transvestite with being homosexual. In reality, there is no connection between the two.