This allows you to build more fields on a planet, thus increasing its capacity.
A Terraformer works very similar to a Lunar Base. It allows you to add 5 new fields to the max size of a planet. It is extremely expensive to add to a small planet, but for your home planet (which always has 163 fields) or a bigger planet nearing its capacity, it can give you the extra couple of fields you need to add another level of Research Lab, or Solar Plant.
Each level of Terraformer needs more resources, just like any other building. In the Terraformers cases, it uses Energy to build. You do not need to continually supply the Terraformer with Energy. The Energy has to be available when you build, but after the new land slots are created, the Energy is not required for the Terraformer anymore.
The Terraformer can never be deconstructed. The Terraformer isn’t truly a building. It is a method to convert unusable land into usable land so you can build more mines or other buildings.
When you destroy your planet, any work that the Terraformer did is gone as well. So if you created at 350+ slot planet, it will be randomly replaced when a new player colonizes that slot.