A Reusable Transformation can only be used within the folder. But a shortcut can be used anywhere in the Repository and will point to actual Transformation.
Reusable Transformations: are objects physically stored outside of a mapping. They are represented as separate objects hanged off Designer/Workflow Manger navigation branches such as Sources, Targets, Transformations, Sessions etc. A mapping or mapplet which includes an instance of a reusable transformation could be deleted/purged without affecting that transformation self. A resuable transformation is intended to be reused by mappings or mapplets within the same folder which it is defined in, still useful but somewhat limiting.
Short cuts: extending the concept of reusable transformations further, Mappings/mapplets in folders other than the one where reusable transformations are defined can still reference them by way of shortcuts. Please note that the referenced folder must be made shareable before shortcuts could be made, otherwise an object copy operation will result instead.
Both reusable transformation instances and shortcut instances are just pointers to the real physical object, so any modification on the physical object itself will ripple through all its referencing mappinga/mapplets immediately, which is both a good and a bad thing. Much care should be exercised when modifying these shareable codes