Two coils of wire wrapped around an iron core. The first coil of wire has a current which produces a magnetic field inducing a current and voltage in the output coil of wire. Depending on the turns ratio in the coils the voltage and current can increase or decrease on the output side.
Pulse transformers take in a pulse signal such as that which comes from data or ethernet, and outputs a safer signal of the same data which can be sent to a transceiver IC. They are mainly used for protection to the transceiver.