You need to learn about "handles".
When you do a 1 second cross dissolve, you need half a second of the first clip after the edit point, and half a second of the second clip before the edit point.
For example, suppose you are to add a 1 second cross dissolve between clip A and clip B:
This transition will start 1/2 second before the edit point, and end 1/2 second after the edit point.
The cross dissolve works by combining the two clips and varying their opacity - so you begin with A in full view, and gradually decrease opacity and B becomes gradually more opaque.
The point is that in that second (1/2 before and 1/2 after) you need footage from BOTH A and B.
This is NOT a problem if A is not used all the way to the end, and B is not used all the way from its start - that extra existing media is used. That is what we call handles.
If you double click on the edit point (the frontier between A and B), the timeline changes and makes this very visible - A is shown on top, B at the bottom - see that A has more frames after the edit point, and B has more frames before the edit point, that were not used in the timeline. [This view of the timeline is what Apple calls "precision editor"; press escape to return to normal view]
They will now be used for the transition - you can even see how A becomes gradually less opaque, and B more opaque
If A has no extra frames, or B has no extra frames, they can't be combined, unless they are pulled back to create the necessary overlap. That is why you are receiving the warning.
