Traditionally embryos were transferred on day 2 or 3 after fertilization. But with the advanced culture media available today and excellent quality control of growth environments in labs, it is now possible to grow and transfer embryos till day 5 when they reach a stage called blastocysts.
At this stage, the embryo has 2 distinct cell types and a central cavity filled with fluid (blastocoel cavity).
The cells in a blastocyst would have just started to differentiate. The surface cells that surround the cavity below the outer shell are called the trophectoderm cells and will later develop into the placenta.
A more centrally located group of cells called the inner cell mass will become the fetus. Transferring embryos at the blastocyst stage reduces the chances of multiple pregnancies and improves selection of the most competent embryos for transfer.