What is the difference between Server.Transfer and Response.Redirect?

Response redirect causes client-side redirect. Visitor browser receives response from server. This response force browser to load page requested by server.

Server.Transfer terminates execution of current handler a executes other page (specified as param). From the visitor point of view this looks like no redirect takes place. The limitation of this redirect is that you can only redirect to page of your Web Application. Response.Redirect allows you redirect to any valid Url.