Sometimes, when getting loot according to your loot spec (world bosses, quest rewards, LFR, bonus rolls, if raid loot is set to personal), there's possible loot from those sources that some characters just cannot get because they don't match their loot specs. While simplifies quest rewards, and makes loot from bosses less frustrating most of the time, there are occasions where it restricts loot a player might want: transmogrification.
"Loot specialization: transmogrification", would contain all the weapons, cloaks and other visible items that character could equip, but be of no practical use for any of their specs. Like agi swords for mages, int maces for rogues. And "could equip" should include items that cosmetic glyphs use, like felguard weapons. It could even be expanded a little wider, to RP items (eg: off hand frills or guns for warriors).