If you would hilight the transition by clicking on it and then open the "Effect control" panel you will see how much you need to trim the video in order to get proper length. the deal is simple, if you applying transition one second you will need one second of video clips and since you placing it in between clips you will have to trim 15 (or 12 depends on the frame rate of video) frames of from each clip and so on.
The reason premiere give that message is that simple. It will repeat the frames in order to cover the length of the transition.