A category is something like a set, but combining the objects with allowed operations. (How very OOP!) The available functions are first-class citizens (called arrows). The objects are the domains and ranges of the arrows, and their internal structures are not exposed. Arrow composition is associative when it is defined. (You can only compose an arrow if the range of one is the domain of the next.)
A functor is just a (natural) function on categories mapping both objects and arrows in a compatible way. Endofunctors map to the same category.
As each object in this category of endofunctors is a function we want to compose, we have to be given a way to do that. This is what that the monoid here does -- it's a way to describe the allowed ways of combining natural transformations, including any systematic tweaks to be done during the combination.
(The classical definition of a monoid is just a set with an associative binary operation with an identity.)