working as a switch and it is derived from the output pin 3 of the IC through a 1K resistor. The IC generates continuous pulses on its pin 3 which makes the transistor switch ON and OFF continuously.
When the transistor will be in the switched ON state the 12 volts from the battery starts passing through it and activate the lamps and in the opposite condition when it is in OFF state then the lamp will also in the off state. This continuous ON and OFF states of transistor makes the lamps flashing. The rate of flashing per second can be controlled by the 100K variable resistor.