An unreconciled transaction is one the bank recorded that has not yet been matched to anything in your books.
Why the count matters less than the trend
A handful is routine — recent activity nobody has worked through yet.
A count that keeps climbing means the matching has stopped happening, and that is the finding. The individual transactions are rarely interesting; the direction is.
What it costs to let them accumulate
Two things, and the second is worse.
Your reports drift. Money that moved without being categorised is missing from every breakdown that depends on categories, so a profit and loss looks complete while quietly understating what was spent and on what.
They become unexplainable. A transaction from last week can be identified by memory. One from fourteen months ago usually cannot, by anyone, and the only options left are to guess or to leave it uncategorised permanently.
That second point is the whole argument for doing this monthly. The work does not get harder in proportion to the delay — it gets harder much faster than that.
The oldest one is the number to look at
Not the count. A hundred transactions from the last three weeks is a busy month. Three transactions from eleven months ago is a problem, and it is the kind that is still there next year.
Where to clear them
Transactions holds the review queue. Reconciliation confirms the result against a statement.