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They do a few different things these days but their primary role is that of radar. The use of radar that flies from a station, hits the aircraft and bounces back to the station is very limited.
In most normal situations the ground station sends out a signal. The transponder receives the signal and transmits the return signal. It allows for greater range of the radar and also allows extra info to be passed to the radar controller like height and aircraft ID.
This is known as Secondary Radar.
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