Heat is transferred in three ways.

1.   CONDUCTION
If one end of a metal bar is heated then heat is transferred by conduction to the cold end.
Good electrical conductors such as copper and gold are  good conductors of heat.
Poor electrical conductors, such as wood and paper, are poor heat conductors.

Heat can be conducted between two objects if they are in close contact.
For example between a soldering iron and a soldering terminal; or between a power transistor and its heatsink.

2.   CONVECTION
Here, heat is transferred by the movement of a gas or a liquid.
Hot air rises and cold air falls. Liquids behave in a similar manner.
A hot resistor causes convection, transferring heat from the resistor to the surrounding air.
Hot water in a pan rises to the top while the cold water  falls to the bottom.
These movements are called convection currents (nothing to do with electric currents).
The above process is called NATURAL CONVECTION.
If a fan is used to aid convection it is called FORCED CONVECTION.

3.   RADIATION
This does not need a gas or liquid to transfer the heat.
Heat is expelled  mostly in the form of infrared radiation.
This is a form of light and travels at the speed of light.
It can travel through a vacuum. 
This is why we can feel the heat of the sun even though it has to travel through the vacuum of space to reach earth.

Polished surfaces are poor radiators but good reflectors of heat. That is why electric fires have shiny reflectors.

Black objects are good radiators.

THE EFFECTS OF HEAT
Heat causes solid objects to expand.
That is why they have gaps in railway lines and bridges to allow for summertime temperatures.

Different metals expand at different rates.
A temperature switch can be made from two strips of disimilar metals fixed together.
As the temperature increases, one strip grows longer than the other, causing the strips to curve. This in turn breaks (or makes) a circuit.

Gases also expand with temperature increases.

HEAT AND ELECTRONICS
Heat is one of the biggest enemies of electronics, causing components to fail.
To minimise the effects some action can be taken.
Increasing the surface area increase convection and radiation. High wattages resistors are larger than low wattage ones.
Using holes and louvres in the casing increases natural convection.
Using fans provides forced convection.
Using heat sinks with fins increases surface area thus providing increased convection and radiation.
Painting heat sinks blacks increases radiation.
Using "heat sink compound", which is a good conductor, between transistors and their heatsinks, improves heat conduction.
Fitting components onto the metal chassis aids the dissipation of heat.