A transducer is a finite state automata that (in effect) has both an input tape and an output tape. So instead of the normal DFA/NFA computation where the automaton has an input that it recognises (or equivalently, no input at all, and an output that it generates), a transducer reads from the input and writes to the output. Otherwise the definition is in essence a DFA/NFA.
So in this case the transducer takes a number (in the form of a string of $1$s - so $4$ would be $1111$) and produces the encoding of the circuit $C_{n}$ ($\langle X \rangle$ means the encoding of $X$ under some [sensible] encoding scheme). So even though the family of circuits is infinite, they can be compactly expressed by giving the transducer.
More details about transducers can be found on the all-knowing wiki (side note, the name transducer is also used to mean some completely different things in other fields).