A 3 phase transformer steps up or steps down AC voltages 3 phases at a time.
In this case a 3 phase transformer is rewound to provide 2 additional phases from single phase and the phase angle on the new phases is changed with capacitors.
The beauty of it is the sine wave of the mains is preserved as it is not processed through electronics. There are also no moving parts and very little parasitic loss when the load is turned off.
As for the size of transformer required, enough to handle the intended load current. On the small motor you mention even a fairly small transformer would be adequate. You need to look at the original VA rating on a transformer you are looking at, if it's equal to or greater then the motor then it will be fine, but you should go for much larger, then you can power more equipment. All the info is in the DVD's though.