kA is a constant for thermal conductivity
k is the thermal conductivity constant.
A is the area through which the heat passes.
T1-T2 is the temperature difference
x1-x2 is some kind of distance.
Actually it is deltaT/deltaX x1-x2 is the distance between the thermocouples. x1 is the position of the first thermocouple x2 is the position of the second. By measuring the temperature drop on a certain distance you are actually measuring the temperature gradient. As in many physical phenomena, the amount of heat flowing from one point to the other depends on the temperature gradient. The larger it is more heat will flow from one point to the other. The minus sign states that it flows from the higher temperature to the lower one.
This formula is the basis of the whole field of heat transfer and is crucial in electronic component design as well as in many other fields of engineering.
Due to its design the TC08 is a very effective instrument for measuring heat transfer.