What is "The underlying provider failed on EnlistTransaction" Error in SQL?

I am having an application hosted in the IIS. My IIS and SQL were in difference systems.Using a single TransactionScope I am inserting into three different tables using Entity framework. Now I am getting the following error.

"The underlying provider failed on EnlistTransaction"

which have the inner exception as

"Network access for Distributed Transaction Manager (MSDTC) has been disabled. Please enable DTC for network access in the security configuration for MSDTC using the Component Services Administrative tool."

this exception have one more inner exception as

"The transaction manager has disabled its support for remote/network transactions. (Exception from HRESULT: 0x8004D024)"

These are my following questions,

Why these exceptions are coming?

How exactly the SQL transaction works in the IIS application?

For single transaction, why I need to enable Microsoft Distributed Transaction Coordinator?

Note: This error is not coming frequently, 2 out of 10 times we are getting this issues. Because of this issue, I can't move this code into production.