After having a good knowledge on the working of the diode, which is a single PN junction, let us try to connect two PN junctions which make a new component called Transistor. A Transistor is a three terminal semiconductor device that regulates current or voltage flow and acts as a switch or gate for signals.
Suppose that you have a FM receiver which grabs the signal you want. The received signal will obviously be weak due to the disturbances it would face during its journey. Now if this signal is read as it is, you cannot get a fair output. Hence we need to amplify the signal. Amplification means increasing the signal strength.
This is just an instance. Amplification is needed wherever the signal strength has to be increased. This is done by a transistor. A transistor also acts as a switch to choose between available options. It also regulates the incoming current and voltage of the signals.