He found that many of the transgender clients on his clinic were women-loving (gynephilic) men who dreamed about having a woman's body.
These dreams were often accompanied with erotic arousal. He therefore drew the conclusion that it was a misdirected sexual impulse that drove them towards transitioning. They had internalized their natural love object, women out there.
I find the concept useful, as it describes people like me -- men who have feminization fantasies, but who do not crossdress -- as well as most crossdressers.
The more I have read about autogynephilia and the more I hear from other like me, the more I realize that his explanation for all of this is wrong. The feminization fantasies are symptoms of something deeper.
I have made a huge list of links to blogs, sites, discussion forums, articles and books that cover autogynephilia (which I now call crossdreaming), which should help you find more information on the subject.
If you are new to the topic, you may want to take a look at my introductory blog posts about autogynephilia over at may main blog: Crossdreamers.