And yet despite the look on my face, you’re still talking and thinking that I care, Anonymous

Definition. A linear fractional transformation is a rational function of the form $T(z) = \frac{az + b}{cz + d}$ where the coefficients $a, b, c, d \in \mathbb{C}$ are complex numbers.
Definition. In addition, if the coefficients satisfy the condition $ad - bc \ne 0$, the function is specifically called a Möbius transformation.
To understand why this condition is absolutely vital, we can arrange the coefficients into a $2 \times 2$ matrix: $ M = \begin{pmatrix} a & b \\ c & d \end{pmatrix}$
The quantity ad - bc is exactly the determinant of this matrix $M=\left( \begin{matrix}a&b\\ c&d\end{matrix}\right)$.
Standard rational functions often break when you divide by zero. Möbius transformations are designed to handle this gracefully by including Infinity ($\infty$) as an actual point. This new topological space, denoted $\hat{\mathbb{C}} = \mathbb{C} \cup \{\infty\}$, is called the Extended Complex Plane (or the Riemann Sphere).
By defining how $T(z)$ behaves at infinity and at its pole, we upgrade it from a flawed function on $\mathbb{C}$ to a perfect, unbroken bijection on $\hat{\mathbb{C}}$.
Consider $T(z) = \frac{az + b}{cz + d}$ where $a, b, c, d \in \mathbb{C}, \qquad ad-bc\neq 0$.
Every Möbius transformation is a bijection of the extended complex plane.
T is well defined, one-to-one, and onto.
We assume two finite outputs are equal, $T(z) = T(w)$ and prove the inputs must have been equal $z = w$.
$$ \begin{aligned} \frac{az + b}{cz + d} &= \frac{aw + b}{cw + d} \\[2pt] &\iff[\text{Cross multiply: }] (az + b)(cw + d) = (aw + b)(cz + d) \\[2pt] &\iff[\text{Expand: }] aczw + adz + bcw + bd = aczw + adw + bcz + bd \\[2pt] &\iff[\text{Cancel common terms: }] adz + bcw = adw + bcz \\[2pt] &\iff[\text{Group terms: }] (ad -bc)z = (ad -bc)w \\[2pt] &\iff[\text{Since we have stricly defined } ad - bc \ne 0 \text{, we can divide both sides by it, leaving exactly}] z = w \end{aligned} $$This proves T is one-to-one on finite points or except potentially at the pole/infinity, but we have defined those manually to be distinct.
We pick any target value w and show we can find a z that maps to it. We do this by solving the equation for z.
$$ \begin{aligned} w &=\frac{az + b}{cz + d} \\[2pt] &\iff w(cz + d) = az + b \\[2pt] &\iff wcz + wd = az + b \\[2pt] &\iff wcz - az = b - wd \\[2pt] &\iff z(wc - a) = b - wd \\[2pt] &\iff z = \frac{b - dw}{wc - a} = \frac{-dw + b}{cw - a} \end{aligned} $$Therefore, since we can find a “parent” z for every possible child $w$ (including $\infty$), the function is Onto. Because $T$ is both One-to-One and Onto on the domain $\mathbb{C} \cup \{\infty\}$, it is a Bijection and $T^{-1}: \mathbb{C} \cup \{ \infin \} \to \mathbb{C} \cup \{ \infin \}$ is well-defined.
Notice the coefficients of $T(z)$ form the matrix $M = \begin{pmatrix} a & b \\ c & d \end{pmatrix}$. The coefficients of $T^{-1}(w)$ form the matrix $\begin{pmatrix} d & -b \\ -c & a \end{pmatrix}$. This is exactly the classical adjugate pattern for finding the inverse of a $2 \times 2$ matrix! Because multiplying a fractional transformation by a scalar (like the determinant) doesn’t change the fraction, $M^{-1}$ perfectly encodes $T^{-1}$.
A fractional transformation is essentially a ratio. If you multiply the numerator and denominator by the exact same non-zero complex scalar $\lambda$, the function does not change at all: T(z) = $\frac{az+b}{cz+d} =\frac{a\lambda z + b\lambda}{c\lambda z + d\lambda}$ where $\lambda$ is a non-zero complex number.
Because of this redundancy, the coefficients a, b, c, and d are not unique. For any non-zero $\lambda$, the sets $\{a,b,c,d\}$ and $\{\lambda a, \lambda b, \lambda c, \lambda d\}$ represent the exact same geometric transformation. In the language of linear algebra, scaling a matrix by $\lambda \neq 0$ does not change the map it induces on the Riemann sphere.
So the matrices $\begin{pmatrix}a&b\\ c&d\end{pmatrix} \quad\text{and} \quad \lambda\begin{pmatrix}a&b\\ c&d\end{pmatrix}$ define exactly the same Möbius transformation. Thus, Möbius transformations correspond not to individual invertible matrices, but to invertible matrices up to nonzero scalar multiples.
This is why the natural matrix group for Möbius transformations is $\mathrm{PGL}_2(\mathbb C)=\mathrm{GL}_2(\mathbb C)/\mathbb C^\times.$
Normalization: To remove this redundancy and make calculations elegant, we often choose a specific scalar $\lambda$ to force the determinant to equal exactly $1$: $ (\lambda a)(\lambda d) - (\lambda b)(\lambda c) = \lambda^2(ad - bc) = 1 \implies \lambda = \frac{1}{\pm\sqrt{ad-bc}} $
When $ad - bc = 1$, we call it a normalized Möbius transformation. It makes calculations cleaner and easier.
Let T be a Möbius transformation with two representations $T(z)=\frac{az+b}{cz+d}=\frac{a_1z+b_1}{c_1z+d_1}$, where not all of a, b, c, d are zero and likewise for $a_1, b_1, c_1, d_1$, and at least one determinant is nonzero: $ad-bc \neq 0$ (so T is non-constant).
Then, there exists $\lambda \in \mathbb{C^{\mathnormal{\times }}}$ such that $a_1=\lambda a, b_1=\lambda b, c_1=\lambda c, d_1=\lambda d.$
$\frac{az+b}{cz+d}=\frac{a_1z+b_1}{c_1z+d_1}$.
Cross-multiplying: $(az+b)(c_1z+d_1)=(a_1z+b_1)(cz+d).$
Expand both sides: $ac_1z^2+(ad_1+bc_1)z+bd_1=a_1cz^2+(a_1d+b_1c)z+b_1d.$ Since these are polynomials in z that agree for infinitely many z, their coefficients must match:
Extracting the scalar $\lambda$. We want to show there exists $\lambda \neq 0$ with $a_1=\lambda a,\quad b_1=\lambda b,\quad c_1=\lambda c,\quad d_1=\lambda d$.
Because $ad-bc\neq 0$, at least one of a, c is nonzero and at least one of b, d is nonzero.
Suppose $c\neq 0$. From $ac_1=a_1c$, we get $\frac{a_1}{a}=\frac{c_1}{c}$ whenever $a\neq 0$. If a = 0, then $ac_1=a_1c$ becomes $0=a_1c$, so $a_1=0$ (since $c\neq 0$), and we can instead use the other coefficients; but generically, this suggests a common ratio [… The reader should continue with the different cases]
Associate to T the matrix $M=\left( \begin{matrix}a&b\\ c&d\end{matrix}\right) \in \mathrm{GL_{\mathnormal{2}}}(\mathbb{C})$, and define its action on the Riemann sphere by $M\cdot z=\frac{az+b}{cz+d}.$
If we scale M by $\lambda \neq 0$, $\lambda M=\left( \begin{matrix}\lambda a&\lambda b\\ \lambda c&\lambda d\end{matrix}\right)$, then $(\lambda M)\cdot z=\frac{\lambda az+\lambda b}{\lambda cz+\lambda d}=\frac{\lambda (az+b)}{\lambda (cz+d)}=\frac{az+b}{cz+d}=M\cdot z$.
So scaling by a nonzero scalar does not change the induced Möbius transformation.
Conversely, we just proved: if two matrices induce the same Möbius transformation and at least one has nonzero determinant (so the map is non-constant), then the matrices differ by a nonzero scalar.
Möbius transformations are represented by matrices in $\mathrm{GL_{\mathnormal{2}}}(\mathbb{C})$, and two such matrices represent the same transformation if and only if they differ by a nonzero scalar. Equivalently, the group of Möbius transformations is $\mathrm{PGL_{\mathnormal{2}}}(\mathbb{C})=\mathrm{GL_{\mathnormal{2}}}(\mathbb{C})/\mathbb{C^{\mathnormal{\times }}}$.
The most powerful geometric feature of Möbius transformations is that every Möbius transformation, no matter how complex, can be built by chaining together simpler transformations, mainly three elementary “atoms” of geometry.
Proof Sketch:
Any circle or line in $\mathbb{C}\cong \mathbb{R^{\mathnormal{2}}}$ can be written as: $\boxed{A|z|^2+Bz+\overline{B}\, \overline{z}+C=0}$ with $A\in \mathbb{R}, B\in \mathbb{C}, C\in \mathbb{R}$.
This is the algebraic description of a “generalized circle.”
Apply inversion. Let w = T(z) = 1/z, so z = 1/w.
Plug into the equation: $A\left| \frac{1}{w}\right| ^2+B\left( \frac{1}{w}\right) +\overline{B}\left( \frac{1}{\overline{w}}\right) +C=0.$
Multiply both sides by $|w|^2$ to clear denominators: $A+B\overline{w}+\overline{B}w+C|w|^2=0.$
This is again a real quadratic equation in w and $\overline{w}$. And therefore: the image of a circle/line under inversion is again a circle/line.
If the original circle passes through 0, then in its equation the constant term C must be 0 (Plug z = 0: you get C = 0.)
Then, the transformed equation becomes: $A+B\overline{w}+\overline{B}w=0$, which is linear in w. A linear real equation describes a line. So, circles through the origin become lines not passing through the origin.
If the original line does not pass through 0, then its equation has $C\neq 0$. After inversion, the term $C|w|^2$ appears, making the new equation quadratic and so we get a circle.
Proposition. Decomposition of Möbius Transformations. Every Möbius transformation $T(z) = \frac{az+b}{cz+d}$ can be expressed or written as a composition of simpler transformations or building blocks, more specifically as a composition of simple translations ($z \mapsto z + \beta$), dilations/rotations ($z \mapsto \alpha z$), and at most one inversion ($z \mapsto \frac{1}{z}$).
This means that geometrically, a Möbius transformation is nothing more than a sequence of shifting, spinning, scaling, and flipping the plane. It gives us a powerful geometric result. If we want to know what a Möbius transformation does to a shape (like a circle or a line), we don’t have to calculate the full messy formula. We just need to now that translations and dilations/rotations preserve circles and lines, and inversions map circles/lines to circles/lines (with the subtlety that circles through the origin become lines not passing through the origin, and lines not through the origin become circles passing through the origin). Since Möbius transformations are compositions of these, they must map circles/lines to circles/lines.
Proof.
Suppose c = 0 (the linear case), then $d \neq 0$ (otherwise $ad-bc=0$). The function simplifies to a linear polynomial: $T(z) =\frac{az+b}{d}=\frac{a}{d}z + \frac{b}{d}$.
We can break this into two steps: $S_1(z) = \frac{a}{d}z, S_2(z) = z + \frac{b}{d}$ a dilation/rotation and translation respectively. Then, the composition matches T(z), $T(z) = (S_2 \circ S_1)(z)$.
If $c \ne 0$ (the rational case), then we use algebraic manipulation to isolate the $z$ term in the denominator: $T(z) = \frac{az+b}{cz+d}=\frac{\frac{a}{c}(cz+d)-\frac{ad}{c}+b}{cz+d} = \frac{a}{c} + \frac{-ad + bc}{c^2z + dc} = \frac{a}{c} + \frac{1}{(\frac{c^2}{bc-ad})z + \frac{dc}{bc-ad}}$
We can identify the operations in order of application (from inside out, starting at z): $S_1(z) = (\frac{c^2}{bc-ad})z, S_2(z) = z + \frac{dc}{bc-ad}, S_3(z) = \frac{1}{z}, S_4 = z + \frac{a}{c}$.
Translations ($S_4, S_2$): Shift z by $a/c$ and $\frac{dc}{bc-ad}$ respectively. Inversion ($S_3$): Flip the result. Dilation/Rotation ($S_1$): Scale by the constant factor $\frac{c^2}{bc-ad}$.
Then, $S_4 \circ S_3 \circ S_2 \circ S_1 (z) = T(z).$
Every Möbius transformation is simply a sequence of shifting, flipping, spinning, and shifting again! $\blacksquare$