Let's say Clinton, Trump, and Sanders on on the ballot. Some voters could rank their choice, from most to least preferable, Sanders -> Clinton -> Trump, while others could rank Sanders -> Trump -> Clinton. If Sanders received the least amount of votes, voters with the first ranking would have their vote transferred to Clinton while the voters with the second ranking would have their votes transferred to Trump. It wouldn't necessarily reallocate votes to third and lower ranking candidates to the second ranking candidate.